At last the government is showing some urgency in deciding how to unblock bank lending to businesses. The timing of Wednesday’s plan may have been prompted by a wish to offset the slew of gloomy corporate and economic news or to look busy at the start of the Westminster term. Whatever the spur, the setting up of a loan guarantee scheme is on the right lines.

The scheme would mean the taxpayer sharing with the banks the risk of short-term lending to smaller and medium-sized businesses, on a roughly equal basis. This split would mean that the £10bn guaranteed by the government should help support up to £20bn of lending. It is certainly right that banks should keep a sizeable proportion of the risk, since otherwise they will lack the incentive to use their judgement when making loans – and ill-considered lending was one factor in causing the credit crunch.