Chuka Umunna MP, Labour’s Shadow Business Secretary, commenting on today’s Bank of England Trends in Lending additional data sets and Credit Conditions Survey, said:
“Today’s figures show that net lending to businesses has fallen by £14 billion over the last twelve months, reflecting the Government’s failure to get lending going to businesses. We are looking to the private sector to spur growth and create new jobs, but this won’t be possible if firms can’t get access to the finance they need to expand.
“Last year the Project Merlin deal, which ministers promised would get the banks lending to firms and create a clear link between bank CEO pay and lending targets, was an abject failure with targets missed and business as usual in bonus payouts. There are real doubts on whether Credit Easing - details of which were only unveiled last week, five months after being announced - will make a difference to firms on the ground. We are clear that the key test for the scheme will be whether it gets finance to responsible, robust businesses who are currently unable to get credit.
“The Bank also confirms that flatlining growth is acting as a major brake on firms being able to access finance. By cutting spending and raising taxes too far and too fast, the Tory-led Government choked off growth well before the crisis in the Eurozone. This week, it has been confirmed that there has been precisely no growth since the Chancellor’s 2010 Spending Review.
“Labour’s five point plan would help firms now, giving small businesses taking on extra workers a one year National Insurance tax break and temporarily cutting VAT to put money back in families’ pockets.”