Labour

Project Merlin lies in tatters and it is clear that its promises were not worth the paper they were written on - Umunna and Leslie

Chuka Umunna MP, Labour's Shadow Business Secretary, responding to the figures announced on bank lending, said:

"The news that the lending targets for small and medium sized businesses set under Project Merlin have been missed will add insult to injury for firms struggling to get the finance they need to survive and expand. The Project Merlin deal lacked any teeth, having been put in place without any mechanisms for enforcement or sanctions in the event that its targets were not met. Project Merlin lies in tatters and it is clear that its promises were not worth the paper they were written on.

"We need to see banks adopting better relationships with their small business customers, because while the banks seek to blame a lack of demand for finance, it is clear that too many firms are put off from applying in the first place.

"Last week we learned from the Bank of England that net lending to businesses has fallen by over £10 billion in the last year and was negative in nine out of the last twelve months. As well as raising taxes and cutting spending too far and too fast, ministers are failing to get the banks to lend which is hitting business confidence, choking off growth and stalling job creation.

"In the Autumn the Government announced to great fanfare that it would be bringing forward credit easing to relieve the credit squeeze on businesses. However, months have passed and businesses are still waiting for details of how and when it will be up and running. While the wait continues, too many firms are going under.”

Chris Leslie MP, Labour’s Shadow Treasury Minister, said:

"It is very disappointing that the banks have once again failed to meet even these weak targets on lending to small businesses. A year on it’s now very clear that George Osborne’s deal with the banks has been good for them, but a bad deal for small businesses and taxpayers.

"While the Government gave the banks a tax cut last year, net lending to businesses has fallen, only 4 firms have been helped by the business growth fund and there has been no progress on making top pay more transparent.  And while people on low and middle incomes are being hit hard, the Government this week voted against Labour’s plan for a tax on bank bonuses to fund 100,000 jobs for young people.

"To get our stalled economy moving again and so get the deficit down we need a plan for jobs and growth and that must include urgent action to boost bank lending to small firms."