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Banks: Lending

House of Lords written question – answered on 14th December 2011.

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Photo of Lord Myners Lord Myners Labour

To ask Her Majesty's Government whether the Secretary of State for Business, Innovation and Skills was speaking on behalf of the Government when he said on 8 December that "The Merlin Project certainly did not succeed in its central objective which was to achieve growth in gross lending by banks" (Official Report, Commons, col. 397).

Photo of Baroness Wilcox Baroness Wilcox The Parliamentary Under-Secretary of State for Business, Innovation and Skills

My right honourable friend the Secretary of State for Business, Innovation and Skills (BIS) did not intend to imply, during BIS Oral Questions in the House of Commons last Thursday, that Project Merlin was not succeeding in its central objective of achieving growth in gross lending by banks. The Secretary of State sent a letter to Gordon Banks MP, copied to the shadow Secretary of State, to clarify the position.

In the letter, the Secretary of State said:

"At today's BIS Oral Questions you asked a question related to credit easing. In my answer, I inadvertently stated that Project Merlin had 'not' succeeded in its central objective of increasing gross lending in the UK. I had intended to use a double negative and say 'the Merlin project certainly didn't not succeed in its central objective, which was to achieve a growth in gross lending by banks'. I wanted to write to you immediately to clarify exactly what I meant and apologise for any confusion caused.

The latest Merlin figures show that the banks have issued £157 billion in new lending to UK businesses during the first nine months of the year despite an atmosphere of continued low business confidence which has impacted on demand. This is why I agree with the Chancellor's assessment in his most recent appearance at the Treasury Select Committee that Project Merlin has helped shield lending to small businesses in Britain.

However, that is not to say that the banks can afford to be complacent on this issue and the Government will continue to monitor bank lending levels for the final quarter of the agreement.

I would like to take this opportunity to underline that I take businesses' ability to access finance very seriously indeed. That is precisely why we are continuing to develop and refine government policies such as the national loan guarantee scheme as well as other access to finance policies".

A copy of the Secretary of State's letter has been placed in the Library of the House and I will arrange for a copy to be sent to the noble Lord.

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