Other ministers (including the chancellor) have insisted that Project Merlin, the deal between the government and the banks to increase gross lending to businesses, has been a success. But Cable apparently disagreed.
Here is the full exchange:
Gordon Banks: Last week we heard how Project Merlin had failed and was going to be bailed out by credit easing. How many banks have signed up to credit easing, how many small businesses will be helped by that, and will it be more successful than the business growth fund was?
Vince Cable: The Merlin project certainly did not succeed in its central objective, which was to achieve growth in gross lending by banks. There has been a contraction in net lending for a variety of reasons, not least the fact that many companies are holding more cash. Credit easing will be commenced soon. The Treasury will maintain a metric of performance by individual banks, and this will lower the cost of capital for many of their customers. The cost of borrowing and covenanting, as much as access, has now become the central concern.
The only problem is, gross lending did increase, even if as Cable then admitted, there has been a reduction in net lending (the amount banks lend minus the loans they call in or are paid off).
So what was going on? According to an aide to the business secretary, what Vince meant to say was “The Merlin project certainly did not not succeed in its central objective…” This makes more sense, and is actually true.
I’m told Cable was bemused when told afterwards what he had actually said. Note to Vince: avoid the double negatives next time.