Outspoken trade and industry minister, Peter Hain, has branded Britain's banks as hostile, conservative and parasitic calling for a "red-tape free, low cost finance" future.

In an exclusive interview for ePolitix, Hain calls for greater provision of low cost loans and long term finance for small and medium sized enterprises and slams the current approach of banking institutions.

"So many SMEs still complain to me about a hostile attitude from banks towards loans," he told ePolitix.

"We want to have a system of institutional finance which seeks to support business, rather than to leech off it. And that is not the situation at the present time," Hain says.

Going on to attack the conservatism of the UK's financial institutions, particularly in the fast-growing and innovative SME sector, Hain said: "British banking is conservative with a small 'c', and I think British institutional finances. We have got some good venture capital funds, but they don't reach 95 per cent of SMEs. If we are going to have fast growing SMEs sector, the knowledge based technology, hi-techs, then we need really red tape free, low cost finance available."

In an interview sending a clear signal to the world of finance that Labour's key second term goals of increasing competitiveness and productivity will mean an onslaught on the vested interests and red-tape of city institutions, as well as government, the DTI minister said: "The number one priority is making Britain competitive, increasing our productivity, and the productivity is still low, despite the advances we have made."

"There is still not enough long-termism in British public policy towards industry and business." The minister added:

"Whether that is the provision of low cost loans, long term loan finance - especially for small and medium sized enterprises, whether that is in terms of our skills base, which is still short of where it needs to be, although we have made great strides forward. Or whether it is reducing the burden of regulation whilst ensuring industry meets it's social and environmental obligations. These are all issues which we need to take forward," he said.