It is very early days yet for the West Midlands Regional Select Committee, which held its first evidence-gathering session of an inquiry into the financial impact of the recession on businesses in Birmingham yesterday.

Too early, perhaps, to reach any firm conclusion about performance.

Labour MPs sat on their own following a boycott by the Conservatives and Liberal Democrats – the Tories because they regard the new watchdog system as an attempt to usher in regional government through the back door, and the Lib Dems in protest at being given only one place on each of the regional committees regardless of the party’s strength in the area.

In terms of discovering new facts about the difficulties facing firms hit by the severe economic downturn, the session was not particularly illuminating.

Senior representatives from the West Midlands banking sector insist there are no constraints on the amount of money they can lend to firms, although there is general agreement that checks on the ability of applicants to re-pay the money are likely to be more stringent.

This much has been said many times over the past few months as the financial sector struggles to find ways of behaving responsibly by throwing off the worst excesses of the sub-prime era, yet also by going the extra mile to throw a lifeline to companies struggling to survive a record slump in order books and profits.

MPs recounted tales of woe from their constituents about the banks’ refusal to issue loans or extend credit lines, and if money is available to insist on the payment of swingeing arrangement fees and a range of other “extraordinary additional demands” before approving a loan.

The bankers responded by relying on statistical evidence that the vast majority of requests for financial assistance are being approved.

It is difficult in a way not to feel a little sympathy for the banks, despite their past profligacy.

Some of the firms demanding emergency funding have run out of cash and are simply attempting to stay afloat and continuing paying employees even though there is little or no work to be done.

If banks cannot be assured that recovery is on the horizon and that order books will pick up, they cannot sanction a loan that is unlikely to be repaid.

That is why only companies with decent products to sell are likely to survive this recession.