Net lending falls by £300m in first quarter despite Funding for Lending

The Bank of England has reported that net lending has fallen by £300m in the first quarter of 2013, despite the government's Funding for Lending Scheme issuing £2.6bn to banks in the same period.

Net lending is an imperfect measure for the effectiveness of the scheme, as reducing lending costs will not necessarily result in an improvement in net lending. Banks can adjust the lending they issue, but have less control over the repayments they receive.

While gross lending might be a better metric, net lending is the one that has been chosen, and the scheme is failing by that yardstick.

Since the introduction of the scheme £16.45bn has been issued to banks while net lending has dropped by £1.8bn over the same timescale.