The Economy

Part of Council Tax Rebate – in the House of Commons at 4:59 pm on 31st March 2009.

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Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer 4:59 pm, 31st March 2009

There would be that danger, and that would obviously be a problem for the UK, because we have several global banks here. But RBS, which is a global bank, is not being rescued by the globe. It is being rescued by British taxpayers, and it is not unreasonable in the circumstances for it to make it a priority to lend to solvent British companies. The Government have to pursue that in the interests of the people whom we represent. I am not a nationalist, but that is the reality of the world that we now live in.

Instead, the Government are pursuing what they call the asset protection scheme, which the Conservatives also support. I argued from the outset, and I probably used strong language at the time, that that is a fraud against the British taxpayer. The leading banks are taking their bad loans to the Treasury—the banks know a lot about those loans and the Treasury does not know as much—paying a fixed fee of insurance and walking away. I have discovered, although I have not yet been able to obtain the documentary evidence of it, that the banks are then promptly closing down the companies that they have insured. That is fraud in a real sense, as well as in a metaphorical sense. That is happening under the noses of the Treasury. There is no reason for that scheme. It does nothing to promote new lending, which is much better done by direction or through credit insurance of the kind that the Conservatives have promoted—both valid approaches to the problem. The scheme is also a massively expensive commitment for the British taxpayer.

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