A senior executive at taxpayer-backed Royal Bank of Scotland has dismissed the effectiveness of the Government's two major small-and-medium-sized business lending schemes.
Peter Ibbetson, the chairman of small business at RBS, said that last year's Project Merlin, which forced SME lending targets on the major banks, and the National Loan Guarantee Scheme had and would do little to help industry access finance. Merlin demanded that banks hand out £76bn in 2011, as the lack of lending in the wake of the financial crisis is considered to be one of the major pressures on the economy.
Speaking at the Labour Party's SME lending summit this week, Mr Ibbetson, pictured, said: "With Merlin, did we lend any more because of it? I struggle to see why – it's our job to lend money. There was no deep thought into whether those [target] numbers were right."
RBS, though, was the only bank to miss its Merlin lending target.
Mr Ibbetson conceded thatMerlin was useful for changing public perception, in that it let prospective customers know that the banks' doors were not closed to new business.
Mr Ibbetson went on to question the replacement scheme, which aims to reduce funding costs for banks and business borrowers.
Chukka Umunna, the shadow Business Secretary, said: "RBS told us the scheme would make little difference, the benefits in the main would not be felt by SMEs and the promised reduction in the cost of borrowing would be insignificant.
"If this is what the country's biggest bank is saying, why should we believe the scheme will make a blind bit of difference?"