A BANKING scheme set up to help small businesses in Essex has been branded a “waste of money” after it was axed having given out just one per cent of a £50million cash pot.

Banking On Essex was scrapped by Essex County Council after giving out just £535,000 in the shape of 20 loans and two overdrafts.

The scheme cost £386,000 to set up, but that does not include running costs or staff pay.

Essex County Council’s Tory leadership decided to axe the scheme as part of its budget announcement.

Lib Dem opposition leader Tom Smith-Hughes said: “When this was first announced with £50million available we said they did not have the experience, but they pressed ahead.

“It was absolutely a waste of money and has not made the huge difference to Essex and was not worth doing.

“They spent a huge amount on it, not to mention management support and time.

“The self-promotion was wonderful, but it was a flop.”

The scheme, which achieved national attention, was to support small and medium sized businesses through the recession and bank crisis.

County Hall worked in partnership with banking giant Santander, but the scheme will now close on March 21.

Council leader Peter Martin said: “There will be no impact on those businesses which have already benefited.

“I am proud our innovation was able to provide access to credit for Essex businesses during the worst of the credit crunch.

“Our decision is influenced by the recent agreement between the Government and major banks to provide greater lending to British firms.”

Senior Tories added that it was just one of 37 ideas implemented, which included helping 120 business through the Fit for Lending programme.

A spokesman for Santander confirmed those businesses already issued loans would still get the support of Santander Corporate Banking and would not be affected.

Council tax was frozen by Essex County Council after the budget for next year was confirmed.

About two thirds of the average Essex taxpayers’ contribution goes to County Hall, just under £1,100, and this will remain the same.

The freeze has been made possible through a Government grant of about £14.5million to make up for the lost revenue.

But staff and services will be cut.

The council is not facing as drastic a situation as others, having already planned for £150million in savings.

However, the authority is still cutting 1,200 posts at County Hall, with 450 compulsory redundancies for 2011/12.

Several services will be reduced, including library opening hours, home-to-school transport, youth services such as Connexions, and the number of recycling centres. Council leader Peter Martin said: “This is the most difficult budget the council has had to produce in decades.”