James Moore: Not much to show for the £1.4 trillion we gave them

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The Independent Online

If nothing else, Britain's banks appeared to have learned the value of a bit of fleet-footed PR.

On the day they were called in like so many naughty school children to be read the riot act at No 11 for failing to provide credit to small businesses, up pops the British Bankers' Association with figures that appear to show they have been doing just that.

Some £391m extra was advanced in June, if the figures are to be believed. So why is it that the Bank of England, no less, said the flow of net lending to UK businesses remained negative in May? Well, the banks appear to have learned a few lessons from No 11 in using figures selectively to present themselves in a good light.

The BBA figures only cover lending to businesses with a turnover of less than £1m. They also don't include overdrafts, and that is the key issue if you talk to groups that represent small businesses. Many of their members are being pushed to the wall not so much by cash crises but by cash flow crises. The banks may be offering more loans to the smallest but they are not offering overdrafts and it is overdrafts that small businesses need as bigger businesses engage in the time honoured (and deeply cynical) tactic of delaying payment during tough times.

It is true that the environment for lenders is not easy – Bank of England base rates may be at an all time low but banks' financing costs still do not reflect that. It would also be the height of stupidity to ask them to send good money after bad by lending to companies which have little chance of paying them back.

But, depending on which estimate you believe, the taxpayer has bailed the banking sector out to the tune of £1.4trillion and yesterday's response to the Chancellor's demands was disingenuous to say the least. Having put all that money up, the taxpayer is entitled to expect a little better.