241 Pizza

This will be topped up by £25 million from the banks.

Many small companies have struggled to access capital as investors have become more reluctant to take risks.

Lord Mandelson said: "UK companies are the lifeblood of the economy and it is crucial that the Government acts now to provide real help to support them through the downturn and see them emerge stronger on the other side.

“It is a relatively small sum of taxpayers’ money to get a much bigger benefit and advantage for firms that need continued access to lending or new lending inthe future," he added in an interview this morning.

The guarantee scheme will be operated by Barclays, Clydesdale Bank, Yorkshire Bank, HBOS, HSBC, Lloyds TSB, RBS/NatWest and Northern Bank.

The Government is also in discussions with credit insurers, which insure firms against one of their client companies going bust, over a government scheme to help companies that have been hit by reductions in their credit insurance.

Standard Chartered said this morning that John Peace, deputy chairman and senior independent director, would step in as acting non-executive chairman.

Mr Davies, who was appointed CBE in 2002 for services to the financial sector, is the latest of a series of non-politicians taken on as ministers by Mr Brown.

Lord Jones, former head of the CBI, was appointed Trade Minister in 2007. He left the Government in the October reshuffle.

Mr Davies is thought to have been considered to step in as chairman of Royal Bank of Scotland, which is now majority-owned by taxpayers.

Lord Mandelson said: “He will be doing extremely valuable work in promoting trade and investment, as well as using his own experience in helping the Government with the banking crisis.”

Mr Davies, who said he voted Labour, said that he was looking forward to his new role and was “very excited".

Alan Tomlinson, a partner with Tomlinsons, the insolvency practitioner, cautiously welcomed the Government's move to boost lending to businesses, but warned that it may come too late for some struggling firms.

"More and more companies, many of them perfectly viable, are going to the wall because of cashflow problems," he said. "Without credit, they are being crippled.

"Anything that can get money moving again has to be seen as a positive, although we shouldn't get carried away.

"Firstly, how long will it take for this latest scheme to filter through — for many companies, probably too long — and will it really get the banks lending again? There's a big difference between theory and practice."

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