A plan to bring together bank bosses and representatives of small business in order to deal with the differences between them has been hatched by the government.

The Chancellor, Alistair Darling and Lord Mandelson, the new Business Secretary agreed the plan after meetings with CEO’s of the main high street banks.

HBOS, Lloyds TSB and RBS have been told to lend money to small businesses at 2007 levels, as a condition of the £37 billion bail-out by the government.

Despite this, many small firms are suffering with unsustainable debt problems and an inability to get credit and they claim that the terms offered by the banks have not improved.