By Daniel Hunter

The latest Bank of England figures show that UK banks continue to cut lending to businesses, despite efforts to reverse this trend.

the Bank's official data shows that net lending has fallen by £300 million for the opening three months of 2013.

However, the figure is a big improvement on the previous quarter, when lending fell by £2.4 billion.

The government's Funding for Lending Scheme (FLS), which launched last August, was designed to boost lending.

Under the scheme, banks and building societies are allowed to borrow money cheaply from the Bank of England, providing they pass that money on to individuals or businesses.

"Net lending of -£0.3bn in the first quarter and -£1.8bn over the past year or so relays how limited the impact of the Funding for Lending Scheme has been," Stewart Baird, Stone Ventures, said.

"From a business lending perspective, the Funding for Lending Scheme has been an absolute failure. We certainly don't need to be told that net lending to business has largely been negative.

"Every business in the UK can feel it.

"Little has changed. The banks remain as cautious now as they were two to three years ago.

"Yes, a handful of lenders including Barclays and Nationwide have taken advantage of the Funding for Lending Scheme but many more have given it a wide berth.

"Our discussions with smaller businesses suggest that the banks' criteria remain extremely tough. Their instinct, as paradoxical as it sounds, is not to lend.

"If a company doesn't have significant assets and security, the banks are especially risk-averse. I hold out little hope for the alleged plans of the FLS participants to lend more during 2013."

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