Budget 2010: Banks lead way to recovery with £94bn loans
BANKS took centre stage in the Chancellor’s efforts to ensure economic recovery today with a guarantee that they will provide £94bn in business loans.
RBS and Lloyds TSB, both partly state-owned, will lead the way in providing these finances – with at least half being made available to small and medium sized enterprises.
The Chancellor hopes the new targets will stimulate lending.
Alistair Darling also revealed that the one-off bank bonus tax he announced last year has generated £2bn – twice what he anticipated it would achieve and this money has been used to cut debt.
This bonus tax on banks will partially help fund a one-off £2.5bn initiative to benefit small businesses and develop skills nationwide.
Darling has also confirmed his support for the worldwide bank levy adding that the G20 must put in place new rules on capital and liquidity for banks by the end of the year.
He also told a packed House of Commons that he intends to launch a new service to adjudicate on credit disputes to ensure that everyone who needs access to finance can justifiably access it.
He also intends to put in place measures that will guarantee a million extra people a basic bank account.
Mr Darling said: “As banks return to profit, there can be no return to the previous situation.
“But their success is vital to the global economy – the sector supports over 1m jobs.
“And a healthy financial services industry is essential for the country’s long term success.”
Mr Darling added that the world could not continue to reward banks for taking excessive risk with taxpayers left to pick up the tab when things went wrong.
Terry Jones, of BDO in Leeds, said the Chancellor said the intention was to get every penny back that the Government have put into the banks. He flagged that the Government will be out of the banks clean as soon as it can.
“To make the banks pay they need global agreement on a global banking tax on transactions and that seems to be some way off.
“The measure to encourage ‘bank accounts for all’ is one of the measures that enable the Government to play the social justice card.”
