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The Treasury is to use its power as part-owner of some British banks to demand that they rewrite their code on lending to business. Ministers want it clearly spelled out that banks must look at all other possible options before they make loan conditions more onerous.
The current voluntary bankers' code for business, drawn up in March by the British Bankers Association, is thin and lacks details, Treasury sources said yesterday.
The move is the latest in a series of government measures designed to ease the impact of the credit crunch on homeowners and businesses.
Tighter codes have already been negotiated by the government on repossessions, and something similar is being considered for lending to business. MPs are reporting numerous stories of banks calling in loans or raising interest payments to as high as 15%, so increasing the likelihood of business failure.
Revenue & Customs is also looking at a range of administrative measures to ease the speed with which businesses have to make payments to the Inland Revenue.
The moves came as Gordon Brown and Alistair Darling signalled they were losing patience with the banks over their reluctance to play their part in easing the lending crisis.
The prime minister also hinted at possible tax measures, saying: "I think you will see in the next few days us in a position to do more to help people face what is a global problem."
There has been speculation that the government would announce tax cuts in the pre-budget report, as ministers continued to insist they were right to increase public spending to stave off a recession.
Brown also kept up his international activity, hosting Angela Merkel, the German chancellor, at Downing Street where they agreed to press China and the Gulf states for a big cash injection into an IMF fund to bail out countries such as Hungary suffering from the credit crunch.
Brown insisted that as a condition of bailing out the banks last month, there had been an expectation that they would continue to lend to small business at 2007 levels.
In an attempt to put pressure on the banks, Darling told MPs at Treasury questions: "We, on behalf of the taxpayer, have put a lot of money into the banking system because we recognise its importance.
"In turn, banks have to recognise the importance, not just to the country but to banks, of ensuring that small and medium-sized enterprises get the support that they need."
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