On a day when failed banking chiefs face a grilling by MPs, small firms have called on the Government to put more pressure on banks to keep them alive.

A poll by the Federation of Small Businesses, which has 7,000 members in Kent and Medway, found that various Government initiatives, such as the 2.5 per cent Vat cut, bank loan guarantees and pledges on payment practices have not worked. They said more action was needed to stimulate the economy.

Today, (10) former bosses of Royal Bank of Scotland and HBOS - Sir Fred Goodwin and Andy Hornby respectively - face a Treasury Select Committee to explain decisions that led to the failure of their banks.

Banks are also under pressure to curb the bonus culture that fuelled excessive risk-taking, a move backed yesterday by Barclays chief executive John Varley, who even apologised for the banking crisis.

The FSB survey found that more than half of the 4,000 businesses sampled had seen a drop in business over the last two months.

Only eight per cent said their banks were making the Enterprise Finance Guarantee available to them. Some 53 per cent doubted whether the scheme would actually compel the banks to start lending again.

A fifth of small businesses are still waiting longer than 10 days to be paid for public sector work, even though the Government pledged that it would speed up payment times. A third said they werfe having to wait longer to get paid for private sector work.

Roger House, chairman of the Federation in Kent and Medway, called the results startling.

They showed there was still more to be done by Government and the banks to keep businesses alive in the recession.

"The Government must use its meetings with the banks to monitor the gurantee scheme and assess why loans are still being refused," he said, adding that more should be done to promote the funds.

Late payers should be penalised and the Government should do more to ensure the public sector did it bit to help the economy.

"The small business sector is a vital source of employment and turnover for the UK economy, especially during these tough times. But these figures show that there is still an avalanche of stumbling blocks stopping this vital sector from surviving and recovering."