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Alistair Darling is to haul in bank chiefs to urge them to improve lending to businesses.
The Chancellor, who is "extremely concerned" about the credit situation facing companies, has pencilled a meeting with chairmen and chief executives from the major banks including HSBC, Barclays, Lloyds and Royal Bank of Scotland.
Mr Darling said on Sunday that the interest being charged by banks appears to have risen while the base rate is at an historic low of 0.5%.
He said they have got to "live up to the promises" they made during bailouts by the taxpayer.
"That's why we will be going through with each individual bank asking them why is it, at a time when the cost of borrowing is coming down, it would appear that the cost to small business appears to have gone up?" he said.
"We're playing our part, the banks have got to understand that the public will not understand it if they do not play their part to the full."
Business groups welcomed his intervention, but opposition parties criticised the Government for taking so long to act.
Shadow Treasury minister Mark Hoban said: "The Government have let small businesses down. They promised action in January but have not delivered by July. This failure is costing jobs and businesses."
Liberal Democrat Treasury spokesman Vince Cable said it is "amazing" that Mr Darling has "only just woken up" to the problem.
"We have been warning about the lending crisis, including in Government-owned banks, for months," he added.
Darling to grill banks on lending - Yahoo! News UK
The Chancellor, who is "extremely concerned" about the credit situation facing companies, has pencilled a meeting with chairmen and chief executives from the major banks including HSBC, Barclays, Lloyds and Royal Bank of Scotland.
Mr Darling said on Sunday that the interest being charged by banks appears to have risen while the base rate is at an historic low of 0.5%.
He said they have got to "live up to the promises" they made during bailouts by the taxpayer.
"That's why we will be going through with each individual bank asking them why is it, at a time when the cost of borrowing is coming down, it would appear that the cost to small business appears to have gone up?" he said.
"We're playing our part, the banks have got to understand that the public will not understand it if they do not play their part to the full."
Business groups welcomed his intervention, but opposition parties criticised the Government for taking so long to act.
Shadow Treasury minister Mark Hoban said: "The Government have let small businesses down. They promised action in January but have not delivered by July. This failure is costing jobs and businesses."
Liberal Democrat Treasury spokesman Vince Cable said it is "amazing" that Mr Darling has "only just woken up" to the problem.
"We have been warning about the lending crisis, including in Government-owned banks, for months," he added.
Darling to grill banks on lending - Yahoo! News UK
