‘The lending targets are totally arbitrary and they will never know if we meet them anyway. The fact that it is gross lending rather than net lending means it is meaningless.’
The targets, outlined by the government, cover only the total amount of lending and take no account of the money paid back by businesses. Net lending has tumbled since the start of the financial crisis as banks turn businesses away and companies look to pay off loans rather than take on new debt.
RBS and Lloyds missed net lending targets, and a whitehall source admitted: ‘Because the targets address gross bank lending it is difficult to asses the impact on the amount of credit available to business.
Lord Oakeshott, a Lib Dem Treasury spokesman – who last night resigned after making these, and further comments following the chancellor George Osborne’s Project Merlin announcement – said the continuing problem of access to funding was an insult to struggling businesses, saying last night: ‘The banks have missed their net lending targets to business over the last three years by a mile. These new targets must have teeth that mean business people will be able to get a loan to help their businesses and boost the private sector’