Branches of the Royal Bank of Scotland could be turned into a regional bank to lend to struggling businesses in Greater Manchester under a Labour government, a leading Labour politician has said.

Lord Adonis said that high-street banks such as RBS – which is 80 per cent state-owned – were currently ‘not open for business’ in the region because they were refusing to lend to well-run firms.

The shadow minister for infrastructure, who is conducting a review into growth and jobs for Labour leader Ed Miliband, was in Manchester attending a summit of business leaders – who told him of their frustration because banks are not lending.

Lord Adonis attended the summit at the Manchester Chambers of Commerce alongside leading figures such as Will Straw, Labour candidate in Rossendale and Darwen and Dame Nancy Rothwell, president of Manchester University.

In an interview with the MEN following the summit, Lord Adonis restated Mr Miliband’s policy that a new network of regional banks should be set up, in the private sector, in a bid to shake up the market.

But he suggested that 315 branches that RBS is being forced to sell off under competition rules could be used for this purpose – although he didn’t give exact specifics how this would come about.

He said: “Banks are not understanding business needs [in Greater Manchester]. Decisions about lending to firms are being taken down in London that should be taken here in Manchester.

“It’s clear to me that the banking system is not open for business up here and we need to challenge that system.”

Asked how this would be done, Lord Adonis suggested that the RBS branches could be used.

He added that other big issues raised with him by business leaders included Transport for Greater Manchester (TfGM) should speed up the introduction of its version of London’s ‘beep-in’ Oyster card for trams, buses and trains, which will not be fully introduced until after 2015, Lord Adonis added.

The peer also restated Labour’s commitment to high-speed rail – adding that new shadow transport secretary Mary Creagh is ‘as enthusiastic’ about the project as her predecessor Maria Eagle.

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