Tories: Labour stole our loan scheme
Mr Osborne said Labour were implementing a Conservative proposal
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Tuesday, 13, Jan 2009 10:59
By Ian Dunt
Labour has stolen the Conservative's loan guarantee scheme despite repeatedly ridiculing it, shadow chancellor George Osborne has claimed.
The accusation follows reports Lord Mandelson, business secretary, will unveil a Labour version of the scheme tomorrow, with loans of up to £1 million for small and medium-sized companies being underwritten by the taxpayer.
"We have been calling on Gordon Brown to introduce a national loan guarantee scheme for two months and while the prime minister has dithered dozens of businesses and thousands of jobs have been lost," Mr Osborne said this morning.
"Let us hope that they will properly implement this Conservative policy rather than a pale imitation, or else they run the risk of repeating the mistakes of their expensive temporary VAT cut and achieving nothing."
The Labour plan is basically an extension of a scheme in the Pre-Budget Report, in which chancellor Alistair Darling promised £1 billion to encourage bank lending.
Government sources indicate the government plan will be less focussed on general guarantees and more towards companies running temporarily short of credit.
But the Liberal Democrats deny the plans are particularly different to the Tory scheme.
"The government's proposal, essentially the same as that of the Conservatives, potentially involves very large taxpayer liabilities and is in effect a subsidy to bank lending," said Vince Cable, the party's economics spokesman.
"We worry that this is another instance of the taxpayer shouldering all of the risks without any of the rewards. It is also an expensive approach when others have not yet been explored.
Mr Cable said the government was sending the banks mixed signals.
"The government seems to lack the bottle to break the banks' lending strike," he said.
"It finds it much easier to use taxpayer-financed guarantees than to get tough on the taxpayers' behalf."
The Labour plan could total up to £20 billion.