Treasury under fire for letting banks miss small business lending targets

The Treasury was accused of lacking the bottle to stand up to banks over a £30billion shortfall in a report by the Commons Committee of Public Accounts. Margaret Hodge, MP and chair of the committee said: "The Treasury lacked effective sanctions against RBS and Lloyds when they failed to meet their targets for lending to small businesses in the first year of the Scheme. The Treasury appears to lack strong determination to use its influence to increase lending." Lloyds provided £3 billion of additional lending- £8 billion short of its target of £11 billion, the committee said. RBS fell £22b short of target lending, the committee reported. Both banks had made the lending commitments under the Treasury's Asset Protection Scheme, which protected RBS and, initially Lloyds, against losses on their assets. The Treasury must develop effective mechanisms to ensure the banks met lending targets, Hodge said. The comments came in the report HM Treasury: The Asset Protection Scheme. The banks had met these targets on mortgage lending but not for businesses, the committee ruled.