Clegg attacks banks for stifling recovery

Deputy Prime Minister Nick Clegg has attacked banks' failure to offer affordable loans to small businesses, labelling it "one of the greatest restraints on recovery for the UK economy".

The criticism, made today during a live webcast, was in response to a viewer question about what the Government is doing to get the flow of credit moving again.

The Government's Enterprise Finance Guarantee Scheme was supposed to make £1.3bn available, offering a 75% state guarantee to encourage banks to lend.

But recent figures suggest lending to small businesses has continued to plummet, falling a further 20% over the last quarter.

Clegg also called the bluff of banks which deny they are withholding credit. He highlighted many available loans are out of reach to those who need them because they are offered at "unreasonable" rates.

He told viewers banks not lending is "one of the greatest restraints on recovery for the UK economy".

"It is not right when SMEs, which are the lifeblood of the British economy, are crying out for loans and can't get them."

The deputy PM, who is effectively in charge of the country while David Cameron takes a two-week holiday with his family, also warned of more Government clamp-downs on a UK tax system he said had become a "paradise" for tax evaders.

"There is more we can do and more we will do to clamp down on tax evasion.

"The British tax system has become a paradise for wealthy individuals and clever lawyers to evade paying tax."

He warned of more action against international tax avoidance and said the Government also had its sights on tightening up corporation tax.

"We will be making further announcements in future Budgets on this," he told viewers.

The coalition Government says it intends to "take a more strategic approach to the risk of avoidance", as the state attempts to draw in every penny to its shrunken coffers.

Last week, HM Revenue & Customs (HMRC) sent a letter to 600 offshore account holders asking them to inform on their advisers' involvement in tax avoidance.