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House of Lords written question – answered on 7th July 2011.

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Photo of Lord Myners Lord Myners Labour

To ask Her Majesty's Government how HM Treasury will initiate follow up action on lending commitments by banks under Project Merlin if these commitments are only expressed in aggregate terms rather than per each individual bank.

Photo of Lord Sassoon Lord Sassoon The Commercial Secretary to the Treasury

On 9 February 2011, the Chancellor of the Exchequer announced a new commitment by the UK's biggest high street banks on lending expectations and capacity. As part of this commitment, the banks will make available appropriate capital and resources to support £190 billion of new credit to businesses in 2011, up from £179 billion in 2010. If demand exceeds this, the banks will lend more, including creating the balance sheet capacity necessary to do so. £76 billion of this lending capacity will be available to small and medium-sized enterprises (SMEs). This is a 15 per cent increase on 2010 lending of £66 billion.

The commitment to make available new lending to SMEs is part of the performance metrics of each bank's chief executive and those senior managers responsible for lending to SMEs. The Chancellor has made clear that the Government will use every tool available to hold the banks to the published lending commitments which they made.

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