Oral question asked in the House of Lords, by Lord Foster of Bishop Auckland (Labour). It was answered on Tuesday, 30 March 2010.

Banking: Government Support

Question: Is not the real test of government policy how quickly and to what extent the banks begin to lend to SMEs to get the economy moving again?

Answer: Banks are definitely lending to SMEs. What we need to focus on is their gross lending, which is their extension of new loans to existing and new customers. As I said earlier, £94 billion has been committed by the Royal Bank of Scotland and Lloyds in new loans this year. Both banks increased their market share last year and were undoubtedly to the fore in meeting customer needs. But at the same time that some customers were borrowing, others were repaying their liabilities to their banks; net borrowing was therefore lower. The critical factor is gross borrowing—the availability of credit to support economic activity.

Secondary information