Figures released this week show the funding for lending scheme resulted in a £500m boost to net lending to business and home owners in Q3, with £4.4bn being drawn under the scheme.
Lord David Sharkey asked the Government about the performance of the scheme in the House of Lords.
Responding, deputy chief whip Lord Dick Newby said the scheme is working by bringing down mortgage rates and will pick up speed in the coming months.
But shadow Treasury minister Lord Bryan Davies said: “The minister is guilty of great complacency. This scheme is going the same way as Project Merlin and various other efforts under this Government.
“Will he acknowledge that £500m is a flea bite in terms of the investment needed in our society and business?”
Newby hit back claiming only Labour would denounce a £500m boost as a flea bite and praising the work of challenger banks.
He said: “These figures show a re-alignment of activity in the lending market towards new entrants which is exactly what the Government has been seeking. A bank such as Aldermore is the best performer increasing its size of offer. The building society sector has also significantly increased its lending specifically because of funding for lending.”