Ministers will unveil a multi billion-pound package of measures today aimed at unblocking lending to small and medium-sized firms amid fresh job losses and dire warnings about employment prospects as the UK heads for a full blown recession.
Business Secretary Lord Mandelson conceded yesterday that firms were facing a “very difficult” credit climate, but he made it clear Government intervention would be targeted to give genuine help to businesses as well as value for money for the taxpayer.
The package of measures to help businesses formed part of a discussion on the global economic crisis which dominated a meeting of the Cabinet at 10 Downing Street.
Lord Mandelson said after the meeting: “I want to make sure that when we intervene, we intervene in a way that is really effective, really targets genuine business needs in a way that gives value for money from the Government and the taxpayers' point of view, and is genuinely going to help businesses in what is a very difficult credit situation.”
He dismissed rival proposals put forward by the Tories for a £50bn national loan guarantee scheme, adding: “I could alternatively pluck any large figure out of the air, produce a slogan, roll out some fine words and then walk away.
“That's the opposition's job. That is not the Government's job and that's not what I'm going to do.”
But shadow chancellor George Osborne insisted the Government appeared to be offering a belated version of the £50bn loans guarantee scheme floated by the Tories several weeks ago.
He said: “With Conservative policies to help get unemployed people back into work and guarantee business lending now being adopted by the Government, it is clear that the Conservatives are setting the serious policy agenda for the recession.”
Meanwhile, Liberal Democrat Treasury spokesman Vince Cable said the Government should “stop messing around with stunts and wheezes and ensure that the banks owned or part-owned by taxpayers operate as state banks maintaining lending for the economy”.
However, the Prime Minister's spokesman said the Government was not proposing to offer “irresponsible blanket guarantees” for all business lending.