A £1billion government scheme is not enough to help small businesses, says Canterbury and Whitstable MP Julian Brazier.

He took Stephen Timms, the financial secretary to the treasury, to task in Parliament over the spending plans in the pre-budget report, which include the small business finance scheme.

Mr Brazier, MP for Canterbury and Whitstable, said: “Does the Minister accept that for small businesses this is a relatively small package compared with the overwhelming effect of the unwillingness of many banks to lend to them?

“Does he also accept that the Government miss-structured their huge package in such a way that the banks have an incentive to pay it off as quickly as possible and to get their loan books down rather than up?

“It is that circumstance that is driving the recession more than anything else.”

Mr Timms replied: “It [the pre-budget report] fully addresses their needs and that is why the package includes a £1billion small business finance scheme, to encourage bank lending to small and medium enterprises, and an additional £1billion facility to help smaller exporters.

“The range of measures is accurately targeted at the problems that small businesses are facing at the moment.”