The Liberal Democrat shadow chancellor has criticised the government for a lack of immediacy in its proposed reform of the banking sector.
Alistair Darling, the chancellor of the exchequer, will unveil the government’s white paper later today, detailing the steps it is proposing to prevent the credit crisis from happening again.
It is expected to contain measures to curb excessive and irresponsible lending and put an end to the big bonus culture in the City.
However, Liberal Democrat shadow chancellor Vince Cable warned that many of the proposals would not come into force until after the next general election, meaning that the current government may not actually be implementing them.
Speaking on the BBC Breakfast show this morning, he said: “We can’t just sit back in this country and let the banks operate without regulation or control.
“Most of the things Darling is proposing are quite long–term – but there is a real problem now.”
He said one of the major problems, which has so far been overlooked, is that the government has taken too much of a back-seat when it comes to directing the banks, despite the fact that vast amounts of taxpayers’ money has been pumped into saving them.
He added: “The taxpayer owns [the banks], yet they’re not being directed or steered and they’re not lending money to good companies.
“The government is a shareholder in effectively nationalised banks, but is operating at arm’s length through its shareholding body UKFI. The government has been too hands off, when what it should be doing is giving them a real steer.
“One of the reasons the economy is going down is banks are not lending to good companies. There are medium-term things we can do.”
© Crimson Business Ltd. 2009