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Treasury ‘experimenting’ with public money – PAC

The Government is playing “a series of expensive experiments” in attempts to boost lending, the Public Accounts Committee (PAC) has stated in a new report.

PAC examined the Treasury’s annual report and accounts for 2011-12 and found the detail of the accounts to be “impenetrable”. The report raised concerns about the department’s ability to respond to a future banking crisis, with some £119bn of cash support for banks still outstanding.

Additionally, attempts to boost lending are not working, MPs argued.

The committee said: “The lending schemes have failed to significantly increase lending.

The Treasury has limited understanding of its role in these measures. It has not set out its goals and intended outcomes, and it has limited management information to help it monitor progress, giving the impression of a series of expensive experiments indemnified with taxpayer’s money”.

Margaret Hodge, the committee's chairman, said: “Some £375bn has so far been injected into the economy as an 'experiment' but the department could not explain to us what the effect has been on the whole economy or on different parts of society.

“The Treasury's attempts to stimulate economic growth through new lending have, so far, not been successful. The National Loans Guarantee Scheme achieved just 15% of its intended take-up.”

A Treasury spokesman said: “The Treasury is focused on its job to support the Government's strategy to deal with the country's debts and rebalance the economy to ensure Britain succeeds in the global race.

“Over the past two years over a million private sector jobs have been created, the deficit has been reduced by a quarter and interest rates have been at near record lows, benefiting businesses and families.”

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