Business Secretary Vince Cable has warned the UK’s biggest banks could face tougher taxation policies if they fail to meet the lending targets set out in the Merlin agreement.
In February, Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Santander agreed to lend £190bn to businesses in 2011, with £76bn to small and medium enterprises. In May, it emerged that the banks had missed the £19bn quarterly lending target to SMEs by £2.2bn.
Giving evidence to the business, innovation and skills committee on bank lending rates last week, Cable said the Government will “examine options for further action” if targets are not met.
He said: “I think if it is clear at the end of the year that the banks have not significantly changed their practices, have not made a significant effort to achieve the targets that they agreed with us, it will then be a question of the Government saying, sorry, this agreement has not worked, and we will be absolved from any commitment on our part, in terms of restraint in respect of taxation.”
London & Country head of communications David Hollingworth says: “I think Vince Cable has got to the point where he needs to remind the banks that the Government has not taken its eye off the ball.”