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Ed Balls MP, Labour’s Shadow Chancellor, said in response to Bank of England figures showing that bank lending to small and medium sized enterprises has fallen over £2 billion (12 per cent) short of the targets set out in the ‘Project Merlin’ deal:

“These are disappointing figures. Just at the time when we need small and medium sized businesses to grow so we can get our economy moving again, it is worrying that bank lending to small businesses is falling short.

“It is early days, but three months on the signs are that the Project Merlin plan is not working. And while the banks are understandably blaming this year's economic slowdown for a lack of demand for new lending, businesses I talk to are fearful that the Tory-led government is letting the banks off the hook.

“When the Project Merlin agreement was first announced, I warned that the government’s deal with the banks was weak and toothless. George Osborne needs to explain to businesses up and down the country what more he will do to get the economy moving and get the banks lending to small businesses so that the government’s targets do not continue to be missed in the next quarter. 

“These figures can only further feed public anger that, as part of this deal, the Conservative-led government is giving the banks a tax cut this year while thousands of police officers are being cut and families on low and middle incomes are being hit hard by the VAT rise. George Osborne should listen to Labour and repeat the bank bonus tax this year on top of the bank levy. We should use the money raised to build more affordable homes, support small businesses and create over 100,000 jobs. Getting people off the dole and back to work paying taxes is the best way to get the deficit down.” 

John Denham MP, Labour’s Shadow Business Secretary said:

“Today’s figures are disappointing, and underline the extent of the challenge facing small and medium sized businesses in accessing the critical finance they need to help get the economy growing strongly again.

“But it isn’t just Project Merlin that is falling short on increasing access to finance. The bid thresholds for the Business Growth Fund and the Regional Growth Fund are set so high that many small and medium sized businesses miss out on a huge swathe of potential investment. 

“With banks failing to substantially increase lending, the Tory-led Government must make banks deliver and reduce the thresholds for these investment programmes so small and medium sized businesses can access the finance they need.”

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