The Public Accounts Committee has said that small and medium-sized UK businesses are still struggling to access credit despite the government’s effort to boost lending.

 

According to the MPs that sit on the committee, net lending by banks using the Funding for Lending Scheme had fallen by £2.3bn ($3.81bn) since June 2012.

 

Margaret Hodge, chair of the committee said: "Small and medium-sized enterprises have a vital role to play in driving the UK’s economic recovery but many struggle to access the finance they need."

 

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Hodge added that the Department for Business and the Treasury could not demonstrate that they were "achieving best value for taxpayers’ money" and the report criticised also the government’s Enterprise Finance Guarantee Scheme, aimed at helping businesses turned down for bank loans.

 

The government challenged the report’s findings stating that they "do not reflect reality, which is that credit conditions for small and medium enterprises are improving."

 

 

The Committee’s view is shared by Tracy Ewen, managing director at IGF Invoice Finance who said: "Currently all hopes are pinned on the British Business Bank which is not yet in place and will undoubtedly have its own kinks to iron out over its first few months.

 

"As the UK emerges from downturn, SMEs, which should be leading the economic resurgence, all too often struggle to capitalise on the change because the government isn’t working fast enough to make its SME lending schemes coherent."

 

According to the latest Bank of England’s figures, lending to businesses fell by £4.3bn between September and November 2013, despite the Funding for Lending’s changes to exclude individuals in favour of more lending to SMEs.

 

The British Chamber of Commerce also agreed on the report, asking the government to go further with its plan for the Business Bank.

 

According to the committee, the new British Business Bank, with £1bn at its disposal, should help drive more lending to business.

 

The report follows the Labour Party’s call for greater competition in UK banking sector and the break up of some of the UK’s largest banks.

 

 

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