Treasury 'in dark' over bank lending

The Treasury is "in the dark" over whether banks are lending more or less to businesses despite the government's multi-billion pound bail-out of the banking system, an influential committee of MPs will warn today .

The Public Accounts Select Committee will also warn that the Treasury will need to decide whether its "own expertise and capacity is up to the job" of turning a profit for the taxpayer when the government sells its stake in Royal Bank of Scotland and the Lloyds Banking Group.

Richard Bacon, Tory MP for South Norfolk and a member of the committee, said: "The Treasury put up a staggering £850 billion of taxpayers' money to prevent the UK's banks from collapsing.

"However, banks' commitments to increase lending to businesses are not being met and it's far from clear that the Treasury knows why.

"It does not bode well that the department of state responsible for the nation's finances appears to be in the dark about the current condition of the lending market. This must change."

Mr Bacon added that the Treasury was confident of selling the government's stake in the bailed-out banks at a profit in future - but "risk management has not always been one of Whitehall's strongest suits".

He added: "The Treasury must be certain that lessons from past asset sales have been acted upon and also examine whether its own expertise and capacity is up to the job.

"The National Audit Office (NAO) is unable to scrutinise directly the actions of the Bank of England, and the Financial Services Authority has only very recently accepted the NAO as its auditor.

"It is only right that the NAO be allowed to scrutinise these bodies, especially when taxpayers put up hundreds of billions of pounds to keep the UK banking system alive and kicking".