£80bn bank lending scheme

The Bank of England and Treasury's £80 billion Funding for Lending scheme (FLS) was fired into action today in the latest attempt to boost the struggling economy.

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CBI: New bank lending scheme 'bigger and broader'

The Confederation of British Industry (CBI) commented on an announcement by the Treasury that the Funding for Lending Scheme is now up and running.

The £80 billion scheme will make money available to banks on the condition they provide cheaper loans and mortgages to first time buyers and small businesses. CBI's director-general John Cridland said the initiative is "broader" than the previous loan scheme:

This scheme should support banks to make finance more affordable to businesses and consumers, while also encouraging banks to lend more.

The Funding for Lending Scheme is likely to naturally replace the National Loan Guarantee Scheme overtime because it is a bigger scheme that is open to a broader range of firms.

BBA: Banks are 'committed' to new lending scheme

The British Banker's Association has said today that they are "committed" to the Treasury's new £80 billion Funding for Lending Scheme, which was put into action today. The BBA said:

The UK's lending market is very competitive - and with support through schemes like the FLS for even lower cost borrowing, now is a very good time for UK businesses and individuals to speak to a bank about their financing needs.

The scheme is open to all banks and building societies and should act as a driver for competition, which should benefit both consumers and businesses.

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Treasury minister: 'We want to broaden lending to banks'

Treasury minister Mark Hoban told BBC Radio 4's Today programme that the Bank of England and Treasury's Funding for Lending scheme (FLS) would "benefit more businesses and households".

Treasury Minister Mark Hoban 'Funding for Lending Scheme to help more businesses'. Credit: Dave Thompson/PA

Mr Hoban said: "The National Loan Guarantee Scheme is aimed at small and medium-sized businesses - we want to broaden it out. The National Loan Guarantee Scheme is still available. It is still there if banks want to draw upon it.

"What we believe will happen is that banks will seek to use the Funding for Lending scheme to offer mortgages to households and channel lending to business customers."

'Funding for lending replacing a scheme that hasn't worked'

The director of the National Institute of Economic and Social Research, Jonathan Portes has said today there is a "lack of confidence" in investing ahead of the government's Funding for Lending Scheme. Mr Portes told BBC Radio 4's Today programme:

In general terms, it is good that the Government is doing something to try to restart lending to the real economy. What concerns me is that this is replacing a scheme that hasn't worked.

We have had a number of these schemes and I think there is still considerable concern that the role of the banking system in doing its fundamental job of channelling people's savings into the real economy just isn't working.

House prices down ahead of funding for lending scheme

House prices have recorded their biggest year-on-year decline in almost three years amid the toughening economy, Nationwide building society said today.

House prices show 2.6% decrease. Credit: Bulkedit

But the market has shown "resilience" compared with some other countries, despite the 2.6% annual drop taking average prices to £164,389 in July, Nationwide added.

The study said the Bank of England's new "funding for lending" scheme could give a boost to the housing market, but with the eurozone crisis continuing, Nationwide expects to see only a "modest recovery" in the coming months.

Labour: Lending to larger businesses will be a ‘blow’ to Chancellor

Labour has claimed that the Government’s replacement of the National Loan Guarantee Scheme with a new Funding for Lending initiative, allowing larger businesses to also take part would be a further blow to Chancellor George Osborne.

The £80 billion initiative to kick-start lending was fired into action today, making money available to banks on the condition they pass it on to businesses and households. Shadow Treasury Minister Chris Leslie said:

If the National Loan Guarantee Scheme was always supposed to be replaced by the new Funding for Lending scheme, then why, two weeks after that new scheme was announced, did George Osborne say that the NLGS would be extended?

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