Lending to small businesses has continued to plummet, falling a further 20% over the last quarter.
The Government's Enterprise Finance Guarantee Scheme was supposed to make £1.3bn available, offering a 75% state guarantee to encourage banks to lend, reports the Mail.
But in an answer to a Freedom of Information Request tabled by new British bank Aldermore, the Department for Business said lending dropped from £186m in the first quarter to £149m in the second quarter.
Lending under the scheme has now fallen by 59% in the last year from £254m in the first quarter of 2009.
Last week, it emerged the head of Barclays' small business division rejected Government plans to set targets for small business lending.
Steve Cooper told the Financial Times such targets would only lead to irresponsible lending.
His refusal to sign up to the lending targets follows a similar refusal by HSBC earlier this month, although part-nationalised rivals Lloyds Banking Group and Royal Bank of Scotland have signed up.
The Government is concerned a lack of credit to small and medium sized businesses is hampering the recovery, although banks say the problem is one of credit demand rather than supply.
UK banks have enjoyed a bumper half-year, racking up gains of £15bn for the period. However, their allocation of bonuses and dividends has become politically controversial amid signs the economic recovery is slowing.
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