Banks and building societies cut loans to households and businesses by almost £2bn despite drawing £13.8bn from the government’s Funding for Lending scheme in its first five months of operation.
The Bank of England announced that net lending fell by £2.4bn in the final quarter of last year compared with the previous three months.
Official Bank of England figures reveal that while 39 lenders signed up to the scheme, just 13 have actually used it and reduced their stock of UK loans by £1.88bn. Out of those, 10 groups did increase lending but their efforts were offset by withdrawals by RBS, Lloyds and Santander.
Business Secretary Vince Cable repeated his call for changes to the scheme, telling BBC Radio 4’s that “it may need to be adapted” and will be talking with the BoE’s deputy governor Paul Tucker on how to improve it.