Royal Bank of Scotland is considering backing out of a government scheme to lend up to £1 billion to cash-starved companies.

The Department of Energy and Climate Change (DECC) announced proposals yesterday for RBS and Lloyds to boost lending to stricken wind-farm developers, which have been hit hard by the credit crunch, which has dried up the flow of funding just as the Government has called for a vast expansion of renewable electricity.

The DECC said that RBS and Lloyds, which are 70 per cent and 43.5 per cent owned by the Government, and BNP Paribas Fortis, the French-owned bank, were collaborating with the European Investment Bank (EIB) to lend the cash to onshore wind-farm developers over the next three years.

The banks expressed surprise at the announcement, issued without accompanying statements from any of the banks concerned. A spokeswoman for RBS said that nothing had been signed and that it would be “at least two months” before a final decision was taken on whether to proceed with the scheme.

The EIB, the long-term funding arm of the European Union, said that it was currently “only doing due diligence” on the scheme. A spokeswoman said that a proposal would not be put to the board of the EIB, owned by the 27 EU member states, until “late autumn”.

The EIB also appeared to reject a Government claim that the £1 billion would form part of an “additional £4 billion of EIB lending to support UK energy projects” unveiled in the Budget. It said that, while it was always interested in new projects, there was no guarantee that the money would be invested in the UK.

BNP Paribas Fortis said that it was “looking into” the announcement while Lloyds failed to return calls.

The Government said that the banks had been “teamed up with the EIB” after mounting Treasury pressure on lenders to boost business lending to kickstart the economy.

A DECC spokesman said that the money should be available by October.

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