Plans to guarantee up to £20bn of loans to small businesses to help them survive the economic slump have been dubbed stunts and wheezes by Liberal Democrat shadow chancellor Vince Cable.
Business secretary Lord Mandelson says the plans would target "genuine business needs" and provide value for money from the taxpayers' point of view.
But Cable says the Government has effectively "bottled out" of ensuring banks meet their obligations to lend to small businesses.
"The Government should stop messing around with stunts and wheezes and ensure the banks owned or part-owned by taxpayers operate as state banks, maintaining lending for the economy," he says.
"This failure is particularly unforgivable in the case of the big semi-nationalised banks like RBS and HBOS, for which the Government is not willing to assume responsibility."
According to the BBC, three types of credit guarantees would be offered to those firms most in need as well as those of most significance to the economy.
- Support for up to £10bn in short-term loans for medium-sized firms to help businesses meet their day-to-day financing needs.
- Backing for loans to help financially sound but credit-starved companies with long-term investment, with specific support for exporters and companies with high-value jobs and products.
- Capital for strategically important small businesses which have overextended themselves during the credit boom.
The Conservatives have also criticised the scheme, saying a larger, £50bn national loans guarantee scheme would be required.
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