Asset protection scheme latest government move to restore lending

The government has launched its latest attempt to try and get the banks lending again to small businesses. By offering insurance that the banks can take out against potential bad debts the government in turn will make the lenders commit to legally binding agreements to lend more money.

The government has launched its latest attempt to try and get the banks lending again to small businesses.

By offering insurance that the banks can take out against potential bad debts the government in turn will make the lenders commit to legally binding agreements to lend more money.

Trying to get lending restores to 2007 levels has been a constant aim of the Chancellor Alistair Darling for the past few months and he again did the round of radio stations and TV shows this morning to assure sceptics that this latest scheme would work.

It follows on less than a week from the unveiling of a £20bnloan scheme by Secretary of State for Business, Enterprise & Regulatory Reform Lord Mandelson that was designed to help SMEs get credit.

In a statement outlining the asset protection scheme the Treasury indicated that there were plans to widen the initiative to something of a more global nature.

“The Government will be taking forward discussions in the coming weeks with its international partners about the establishment and co-ordination of such schemes by a number of countries. This document summarises the headline terms of how a UK scheme would be implemented,” said an H.M. Treasury statement.

Critics have attacked the increasing burden on the tax payer with some describing the asset protection scheme as the last throw of the dice as the government tried to get credit flowing again.

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