Labour has hit out at the Government’s funding for lending scheme, claiming it is a panic measure with a short-term focus.
Labour Shadow Treasury financial secretary Chris Leslie says he is concerned the scheme is not focused enough on SME lending.
The funding for lending scheme officially opened for business yesterday, meaning banks and building societies can access cheap loans through the Bank of England.
The new scheme is set to replace the National Loan Guarantee scheme, known as credit easing, unveiled by chancellor George Osborne at the Conservative party conference last October and re-iterated in the March Budget.
Leslie (pictured) says: “The chancellor announced the flagship credit easing scheme in the March Budget but is sidelining it just four months later. This chopping and changing is chaotic.”
He says the credit easing programme has only managed to provide £2.5bn of loans to businesses, compared to Government targets of £20bn.
Osborne says the scheme has been a success and funding for lending is a more generous version of credit easing.
Leslie says: “As the recession has worsened, the chancellor has begun to panic, which explains his emergency call to the Bank of England to set up funding for lending.
“Our concern about funding for lending is that it is not targeted at SMEs. It comes after a series of other failed initiatives to re-start the economy. Project Merlin was a flop. Credit easing was strangled at birth. I really hope this latest scheme works but the Government is hardly filling anyone with confidence.”