The Lloyds Banking Group is to increase its funding to the Lloyds TSB Foundation for England and Wales by nearly a quarter to £25.24m for 2011.

And the bank has pledged to sustain this level of annual contribution to the grantmaker until 2013. The contribution is significantly up on 2009, when it was £20.84m.

Linda Kelly, chief executive of the England and Wales foundation, told Civil Society that the increased funding for England and Wales was “not at all” connected to the recent decision of the Scottish Foundation not to renew its covenant with the Lloyds TSB Banking Group.

She said that the increased money was particularly timely for many small and medium-sized charities which are feeling the brunt of the economic downturn. The foundation’s own research found that 70 per cent of such organisations feel the funding environment has been harmed since the recession, and half expect their income to be down year-on-year.

MPs call for government intervention in Scottish Foundation dealings

The funding announcement follows the tabling of an early day motion in parliament last week by Liberal Democrat MEP for Scotland John Thurso, criticising the decision by Lloyds Banking Group to terminate its covenant with the Lloyds TSB Foundation for Scotland.

The EDM, which has signed garnered 16 MP signatures, condemns the Lloyds Banking Group’s plans for the Scottish philanthropic wing as “detrimental to the foundation and would transform it from a charity to a corporate foundation”.

Thurso and the EDM signatories have called on the UK government, which owns 46 per cent of the banking group, to express its concerns about the way the bank has dealt with the Scottish foundation.