The Government has failed to punish RBS and Lloyds for not hitting business lending targets

The Treasury decided it would be counterproductive to impose sanctions on the taxpayer-supported banks, according to a report by the Public Accounts Committee (PAC), which acts a watchdog for public spending.
Margaret Hodge, who chairs the PAC, said: "The Treasury appears to lack strong determination to use its influence to increase lending to small businesses.
"We expect it to find effective mechanisms to ensure the banks meet their lending commitments."
The Treasury looked at various sanctions but decided each had a downside which outweighed the benefits, the report said.
The PAC said this was "not satisfactory".
MPs had been examining the Treasury's Asset Protection Scheme, which was designed in January 2009 to support ailing banks by insuring them against further losses on bad loans.


It originally exposed the taxpayer to a liability of £1trn, but that figure has since fallen to £512bn.
RBS had a target of £16bn of business lending between March 1, 2009, and February 28, 2010, but its customers repaid more than expected that year and its net business lending was -£6.2bn.
Lloyds was expected to lend £11bn, but once repayments were included the net result was just £5.7bn.
Both banks achieved their targets the following year when they were judged on a gross figure of how much they paid out instead of a net figure including customer repayments.
Lending targets are a toothless tiger when it comes to increasing bank lending for small businesses.
Andrew Cave, head of policy, Federation of Small Businesses
In February 2010, Britain's biggest banks agreed they should lend up to £190bn to business in recognition of the Government support to the industry and the fact that executive pay would suffer if they did not.
But the Federation of Small Businesses is sceptical about lending targets.
The organisation's head of policy Andrew Cave told Sky News: "Lending targets are a toothless tiger when it comes to increasing bank lending for small businesses."
It is very difficult to see, with so many small businesses being turned away by the banks, how the Treasury or any other organisation could monitor individual lending decisions to get banks to lend up to their target levels.
The Treasury has forecast it will achieve a £5bn profit on the Asset Protection Scheme once it is wound up.
Lloyds Banking Group pulled out of negotiations on the scheme before joining, but the Treasury deemed it to have enjoyed benefits worth £2.5bn from market expectations that it would join, and it has paid this to the Government.
RBS has paid £2.1bn in fees towards the scheme which it expects to exit in 2012.