All the brave words uttered before the election about forcing banks to lend to businesses seem to have dissipated like so much hot air.

All the brave words uttered before the election about forcing banks to lend to businesses seem to have dissipated like so much hot air.

The government’s green paper*, Financing a Private Sector Recovery, is a masterclass in stating the obvious, skirting the issues and evading responsibility.

We learn, for instance, that ‘Businesses need finance for both working capital and investment purposes’. There’s a helpful table listing the different ways in which companies can access said finance. If you’re a company with sales of less than £25 million, you’ll find that bank lending is pretty much your only option. But sadly, ‘Lenders struggle to assess the viability of a loan to some SMEs lacking a sufficient track record or security’.

So what are the big ideas? What’s the government come up with in the two years of thinking time it’s had since the beginning of the financial crisis?

Well, there’s the Enterprise Finance Guarantee Scheme. Admittedly, it already exists. But it’s due to expire in March 2011. So the green paper helpfully suggests it could be extended (doing nothing for really small businesses which don’t benefit from it anyway).

There’s an interesting idea about helping banks to work together with business angel groups. Admittedly, this is already happening too, but you don’t always have to come up with new ideas, right?

But wait, ‘the Government is interested in exploring the case for a National Loan Guarantee Scheme to improve lending to mid-sized businesses’. I have to admit, I didn’t think the case for this needed to be explored any further, but I’m sure the government’s right not to rush into anything. This isn’t an urgent issue, after all.

I say that because, apparently, ‘conditions have improved greatly since the height of the financial crisis in late 2008 and 2009’. This may be news to many businesses. A survey just released by the Forum of Private Business finds that 1 per cent of respondents agree that lending conditions are improving (compared to 3 per cent in May). The cost of secured loans is 4.5 per cent on average, 400 basis points higher than the Bank of England base rate. An overdraft will cost you 5.8 per cent and an unsecured loan 11.8 per cent.

VInce Cable told the BBC’s Robert Peston that the green paper was sending a ‘strong signal’ to the banks. They must be laughing their heads off.

* For anyone who isn’t familiar with Whitehall jargon, a green paper is defined by Wikipedia as a ‘tentative government report of a proposal without any commitment to action’.