I’M going to tell you about the biggest robbery in history — certainly in British history. It involves most of the big banks. These corporate culprits got away with at least £30 billion of other people’s money, though the figure could be upwards of £50bn, depending on how you calculate consequential losses. Surprisingly, hardly anyone knows this robbery took place though it has decimated Britain’s small businesses and is a key reason why productivity and economic growth have been so low over the last decade.

As was exposed in a major debate at Westminster last week, after the 2008 financial crash, the big banks decided to use the small business sector as a cash cow to rebuild their profits. The result has been a corporate raid on small family businesses that has ruined lives, driven folk to suicide, destroyed marriages, crushed economic growth and punished entrepreneurship.

It is difficult to count the number of companies affected, but it runs into hundreds of thousands. For opposing this smash-and-grab raid, many honest bank executives have found themselves out of a job. Meanwhile, the senior executives who masterminded this heist have gone on pocketing their ill-deserved bonuses. Some of them deserve to go to jail.

Here’s how matters unfolded. A decade ago we saw the great bank crash. This was precipitated when banks borrowed gazillions from each other to invest in the derivatives market – essentially a form of gambling in which a bank lays off potential liabilities by betting against itself. Soon the trade in derivatives was making more money for the banks than actually lending folk cash to do real things such as build factories. You have to grasp that banks “book” up front the profits on selling these derivatives; if something goes wrong even a decade hence, they have to pay out and lose their shirt. If that sounds dodgy it’s because it is. Of course, banks pay big accountancy firms to give their books a clean bill of health. Yet some of these accountancy firms have a terrible track record when it comes to uncovering financial weakness in companies.

One of them said HBOS was doing fine just before the bank collapsed, and needed a £ 25bn cash injection from the Bank of England. Recently, we saw something similar with Carillion, the failed construction company. Why don’t the regulators do something about this?

Back circa 2008, the big banks were making most of their profits from selling derivatives (ie betting). But they needed new things to bet on. So they sold mortgages to folk who could never pay back – the infamous sub-prime loans. When (predictably) these loans turned sour, the banks had to pay out on their derivative contracts. Result: banks teetered on the verge of collapse and had to be bailed out by the taxpayer. In the UK, at peak, the Treasury and Bank of England had to pump in £1.1 trillion to keep the banking system afloat. Remember that the next time anyone tells you about the superiority of the free market over collective action.

Most folk think that the bail-out of the banks was the end of the matter. Not so. Having been given the kiss of life by the taxpayer, the banks now needed to find a new way of making money. How could they to do this in a weak economy? Answer: shake down the small business sector. Why pick on them? Because unlike lending to individual consumers, lending to small and medium scale enterprises (SMEs) is not regulated.

In other words, if a chip shop or guest house owner is diddled by their bank, their only recourse is to sue. You try suing a global banking corporation and see how far you get. The SME shakedown worked like this. Pre-2008, the banks sold lots of special fixed-interest-rate loans to SMEs. That sounds innocuous until you grasp this was a scam that allowed the banks to use these loans as the basis for trading in derivatives – which the SMEs were not told about.

After 2008, interest rates collapsed to near zero. Naturally, SMEs wanted to re-bank, to take advantage of these lower interest costs enjoyed by their competitors. But banks like the Clydesdale refused to let them unless the SMEs paid exorbitant break penalties. Result: SME bankruptcies multiplied.

WHY didn’t the banks help the SMEs rather than watch them fail? Because the banks could then grab the assets for nothing. This was the heart of the Great SME Bank Heist. Banks even set up special units – such as the RBS Global Restructuring Unit (GRG) – to process the extraction of value from small business customers they forced into bankruptcy. This often involved a bank appointing outside “consultants” to value the property owned by the SMEs – a highly notional exercise. Company owners often disputed these valuations as being too low. In one year, GRG made a profit of more than £1bn. Overall, experts reckon that the banks took the SME sector for between £30bn and £50bn. (For scale: RBS has a market value of £35.6bn.)

Banks targeted particular classes of SME customers they thought were vulnerable to a shakedown. For instance, GP surgeries and care homes. One of the causes of the growing shortage of GP practices arises from the fact these SMEs were trapped into taking out expensive (derivative-backed) loans to cover new premises. For instance, the Ridge practice in Bradford ended up paying RBS £3.6m on a derivative-backed loan of £9.5m loan to fund new premises. Remember that the next time you can’t get a GP appointment.

The last few weeks have seen an interesting debate in the pages of The National, suggesting the SNP Government should not become too left-wing or anti-market, lest the independence movement alienate the business community. My conclusion is quite the opposite. The SME sector has been taken to the proverbial cleaners by the big banks over the past decade. The SME community wants to be defended from rapacious banks such as RBS. Any Scottish government – especially after independence – should be actively regulating and protecting local businesses from a greedy, exploitative financial system whose aim over the past decade has been to extract every last ounce of profit from those who really create value in the economy.

Basing Scotland’s economic future on turning Edinburgh and Glasgow into a mecca for inward-investing banks is a potential recipe for disaster. Yes, banks bring with them jobs. But the net result of our reckless financial system over the past 15 years has been the worst economic crash since the 1930s, a concentrated attack on the SME sector, massive consumer debt and a growing distortion in incomes. Promoting an independent Scotland as another Switzerland or Luxembourg is a chimera. Worse, even if it succeeded, our political system would end up corrupted and in thrall to global financial interests.

Instead, we need to create a new banking system that is publicly owned and directed at supporting the genuine needs of individuals and local SMEs. Start now.