Chancellor urges banks to pass on new rate

The government has called on banks to pass on the new base rate, while admitting it cannot force them to do so.

The Bank of England's monetary policy committee yesterday (6 November) announced a reduction of 1.5%, leaving the base rate at 3% - its lowest in over 50 years.

The Chancellor commented: "I believe that it is imperative that banks realise they have got to play their part in helping business and helping people."

Mr Darling added that, in the end, the government could not force lenders to adopt the new base rate.

"Banks have to decide, on an individual case, the terms and conditions on which they lend."

Meanwhile, a report in the Independent newspaper has suggested that Labour MPs fear a voter backlash should businesses and individuals not feel the benefit of the new lending rate.

Yesterday, the Federation of Small Businesses claimed that the new lending rate would save small businesses £750 million.