Government could fail to reach £1bn NIC target

Date: 6th January 2010

The £1 billion target of funding for the National Investment Corporation for small businesses is in danger of being missed by the government, new reports have suggested.

An injection of taxpayers' money could now be used to meet the figure after funds from UK retail and investment banks were lower than expected.

The Department for Business is due to meet with senior financiers next week in order to strike a deal, The Times reported.

According to the newspaper, the project has been affected by businesses taking offence to announcements made in November's Pre-Budget report surrounding the taxation of bonuses.

The exact form the NIC should adopt has also been a cause of disagreement with some organisations believing the funds should be exclusively accessible to small businesses.

Others have argued that the funds should be used to stimulate the UK economy as a whole.

Royal Bank of Scotland and Lloyds, which are partially owned by the government, have agreed to put £100 million each into the fund while HSBC and Barclays are expected to invest a further £50 million.