It’s been a few weeks at least since George Osborne’s last U-turn, so it must be time for another one, mustn’t it? Today’s launch of the Funding for Lending Scheme is being hailed as another change of course from the Chancellor as it signals the slow death of the National Loan Guarantee Scheme. The Sun’s editorial this morning compared George Osborne to a gymnast, and said he was the ‘master of the U-turn’.
The NLGS has only lent £2.5bn of the £20bn that it was allocated so far for small and medium businesses, and the FLS, which allows banks and other financial institutions to borrow at below market rates, is expected to supersede it. Sky reports a government source saying: ‘The scheme is not being formally axed, but it is reasonably to expect that banks will not deem it sensible to continue accessing it.’
Mark Hoban appeared on the Today programme earlier, where he said:
‘The National Loan scheme was very successful; it made 16,000 loans over the course of the last quarter, which is worth about £2.5 billion at lowest interest rates. But what we’ve identified is that there are more businesses and households out there who’d benefit from lower rates of interest and that’s why we’ve introduced the Funding for Lending Scheme.’
This isn’t so much a U-turn as it is shoving a scheme in a box in the attic and hoping everyone will forget that it existed. But somersaulting between policies does risk damaging business confidence in the government.
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