Derek Twigg (Halton, Labour)

What recent representations he has received on the level of bank lending to small and medium-sized businesses; and if he will make a statement.

Jim Cunningham (Coventry South, Labour)

What recent representations he has received on the level of bank lending to small and medium-sized businesses; and if he will make a statement.

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

The Bank of England's latest credit conditions survey suggested that there has been a second consecutive increase in the availability of corporate credit, in the second quarter of this year; and it expects a further easing in the following quarter.

Derek Twigg (Halton, Labour)

My constituency has seen some of the largest increases in unemployment in the country, so it is vital that the banks support viable businesses and maintain jobs. Will my right hon. Friend do all that he can again to encourage banks to lend to viable businesses? There is an inconsistency among the banks which has been brought to my attention by a number of constituents.

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

My hon. Friend raises an understandable concern. We do have lending agreements with those banks in which we have substantial shareholdings, the Royal Bank of Scotland and Lloyds Banking Group. Those agreements will this year see RBS lend £25 billion and Lloyds lend £14 billion. In some cases, instructions do not appear to have worked their way down to regional and local levels to ensure that high-level agreements have been translated into available lending for companies and individuals. I am meeting the banks shortly to discuss that matter further, but they must ensure that the people who are responsible for making those decisions make them in the way that we want; that, in many cases, they renew their acquaintance with some of the businesses with which they deal; and that they get back to some good old-fashioned banking.

Jim Cunningham (Coventry South, Labour)

Following on from that, though, this has been going on for quite a long time; the banks' slowness to help small businesses has often been raised in the House. My right hon. Friend said that he is going to meet the banks shortly. However, what effective measures can he take, because small businesses are suffering, they are impatient, and people's jobs are at stake?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

I agree with my hon. Friend. It is important, particularly if we are going to see a recovery, to ensure that credit starts flowing, especially to the small and medium-sized enterprises sector, which employs so many people in this country. As I said a moment ago, it is important that the banks honour their commitments. In addition to the commitments that I referred to, Barclays and HSBC have also given undertakings to lend additional money during the course of the next year. It is very important that we see that through.

Michael Fallon (Sevenoaks, Conservative)

Can the Chancellor confirm that lending to business under the small firms loan guarantee scheme and the enterprise finance guarantee scheme was only £178 million in the year just finished—less than half the original target—and that despite the taxpayer billions and all the Government's promises, new lending to business is still falling in this financial year? Why?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

At the beginning of this year, the take-up of lending was slower than we expected, not only on the supply side, on the part of banks, for the reasons that I mentioned, but because, as the hon. Gentleman will know, we saw a very substantial downturn in the economy at the end of last year and the beginning of this year. The result has been that the rate of lending has not been as high as we would have liked. However, all the mechanisms are now in place—certainly the funding is in place—and it is now important to ensure that lending takes place and gets put into the economy as quickly as possible.

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

As my right hon. Friend knows, there is a balance to be struck in this regard. About a year ago in Treasury Question Time, Members on both sides of the House expressed concern about irresponsible lending. Inevitably, there has been some retrenchment on the part of lenders to ensure that when they lend money the borrower can maintain the repayments, which is obviously very important. The general point that my right hon. Friend makes has been made on both sides of the House. It is absolutely imperative, in this country and in others, that the banks see through the obligations that they have entered into. We need to get credit going again because that will be the thing that helps to drive the recovery. I will certainly be raising these matters when I meet the banks shortly.

George Osborne (Shadow Chancellor of the Exchequer, Treasury; Tatton, Conservative)

The Chancellor says that lending in the economy is lower than he expected. Perhaps that is something to do with the fact that half his schemes are not working. When he launched the asset-backed securities guarantee scheme, he said that it would

"increase confidence and capacity to lend, and...support the recovery".

Can he tell us how many major banks have made use of that scheme?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

We are still in discussions with the banks to ensure that that facility is there, but it has to be seen in the context of a range of other measures that we have introduced to help to stabilise the banks and help to get lending going again. The hon. Gentleman would be on much stronger ground if he reminded the House that he opposes every single one of these measures because he is against any sort of stimulus in the economy at all.

George Osborne (Shadow Chancellor of the Exchequer, Treasury; Tatton, Conservative)

I remind the Chancellor that almost a year ago we proposed a national loan guarantee scheme, which would have solved many of these problems. The answer to my question is zero—not a zero per cent. rise, but simply zero. Indeed, the Communities and Local Government Committee has today produced a report saying that although the asset-backed securities guarantee scheme is

"one of the most of the important of the weapons...for tackling the effects of the credit crunch...it is not working",

and the Labour Chair of the Committee says that

"it is doomed to fail".

The Chancellor talks about context. That scheme has no take-up, the trade credit insurance scheme has helped just 13 firms, and the mortgage rescue scheme for homeowners has helped just six families since it was launched. Do not this Prime Minister and his Cabinet increasingly resemble a deluded emperor looking at Potemkin villages—schemes that were announced only in a press release and do not actually exist on the ground? Will the Chancellor go back to the drawing board, look again at the asset-back securities guarantee scheme, redesign it, re-price it, and get it working so that he can deliver, to coin a phrase, real help now?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

The hon. Gentleman refers to his national loan scheme, which is all very well except that at one and the same time, he was saying that he would not provide any funding to ensure that it was actually in place. Then the shadow Business Secretary had to admit that if the Opposition had such a scheme, the taxpayer would be hit for it despite the fact that the Conservative party is against spending money on these things.

We are putting in place a range of measures to help businesses, for example on the time to pay and on enabling small businesses to carry back losses over three years, and the scheme to help the car industry—the scrappage scheme. A range of measures are being taken. I also have to say to the hon. Gentleman that a range of measures are in place to stabilise the banking system and ensure that it functions properly. All those things are in place. Some of them will take time to work their way through, but every one of them has one thing in common: they are opposed by the Conservative party. I welcome the Opposition's concern about them, but for the sake of completeness they should point out to people that they are against every single one of those measures to help our economy.

Brian Iddon (Bolton South East, Labour)

I have a medium-sized company in my constituency that distributes white goods to shops. Recently it has had to lay off a number of its work force because of the difficulty of acquiring trade credit insurance. May I ask my right hon. Friend what good news he may have for firms such as that, which are having such difficulties?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour)

The Department for Business, Innovation and Skills has put in place measures to help with trade credit insurance, and it is examining the matter carefully to ensure that we can improve the availability of trade credit. That is very important not just for small firms but for large ones as well, and we are pursuing the matter because it is necessary to get it going.