Lord Mandelson, the Business Secretary, will ask Britain’s biggest banks on Monday to explain why they have refused to cut interest rates for customers in line with base rates.

Gordon Brown expressed his frustration yesterday at their failure to act on Thursday's one percentage point rate reduction to homeowners and businesses and has ordered officials to make his unhappiness clear to them.

Yesterday, Royal Bank of Scotland, which is partly owned by the Government, became the latest lender to decide not to pass on the full benefit by saying that it was cutting its standard variable rate (SVR) by only three quarters of a point.

Six of the top ten lenders have said that they will be passing on at least some of the reduction to their SVR customers.

About 1 million borrowers have mortgages linked to a standard variable rate and thousands of homeowners are reverting to standard variable rates after coming to the end of their low-cost fixed deals.

Mr Brown told GMTV that banks “should really pass on the interest rate cut”. He said that the Government was prepared to step up pressure days after announcing statutory measures in the Queen's Speech to treat customers more fairly.

He continued: “Remember, last time there was a cut we had to speak to them before it was passed on - and we will be speaking to them again.”

Alistair Darling, the Chancellor, echoed the call but conceded that some banks might have difficulty. “Obviously, some banks and building societies need to keep an eye on being able to attract savings in, so they need to make sure their interest rates are adjusted accordingly,” he said.

Lord Mandelson, along with Lady Vadera, the Business Minister, will see representatives of the five big banks at a meeting of the small business finance forum on Monday.

The banks have been handing over confidential information on customer transactions to Treasury officials so that they can examine whether the banks are deliberately hoarding cash, and Monday is expected to be a “day of reckoning”.

Vince Cable, the Liberal Democrat Treasury spokesman, said: “There are very contradictory signals being given to the banks by the Government. On the one hand, they are being called on to make rate cuts, and on the other being told to operate commercially and strengthen reserves.

"The Government should also recognise that some banks are having to borrow money at well above Bank of England base rate. To force these banks to pass on the full rate cut would mean them lending at a loss.”

In an attempt to ease pressure on the banks, Angela Knight, chief executive of the British Bankers' Association, will present a revised statement on principles on small business lending, which ministers hope will encourage lenders to give greater help to customers.

After the rate cut on Thursday, only four banks passed on the full cut to borrowers on variable rate deals. Lloyds TSB, HSBC and Bristol & West are cutting rates by 1 per cent from January 1. Woolwich, the mortgage unit of Barclays, is cutting by 1.15 percentage points, but it made no cuts after the last base rate reduction.

Halifax, which is part of HBOS, the banking group being taken over by Lloyds TSB, argued that it could not pass on the full cut to borrowers because it needed to protect the interests of savers.

However, the bank said that it had hit savers with cuts in interest rates of up to 2.22 percentage points on Thursday night, more than twice the base rate reduction. The return on a three-month fixed rate bond has fallen from 5.92 per cent to 3.7 per cent.

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