Clegg talks up 'Government bank'

21/11/2008 12:58

The Liberal Democrats have suggested using local councils or the Post Office to distribute state funds to small and medium-size enterprises (SMEs) in a bid to boost funds.

Party leader Nick Clegg said the Government must take more radical action to improve lending or else solvent firms were in danger of failing due to a lack of investment.

He said there was also the possibility of setting up a special "bad bank" that would take on the toxic debts of nationalised banks such as Northern Rock - freeing them to lend more. The vehicle could be sold by the Government when market conditions improve.

He told BBC Radio 4's Today programme: "What we are saying is that there are a number of other ways that we need to explore of getting money back into the economy if the banks are refusing to do so.

"This is a complete departure from the kind of banking practices you would want to see in normal times, but these are not normal times.

© Press Association 2008