Cameron criticises Labour over crisis

David Cameron on Sunday attacked the imminent nationalisation of Bradford & Bingley, as the bank’s fate became the focus of a bitter struggle between the Tories and Labour over which party is best placed to manage the financial crisis.

The Conservative leader said nationalising B&B would leave the taxpayer with the “whole risk”, adding: “I’m not signing any blank cheques.”

The Tories, beginning their party conference in Birmingham, are aware of the risk of being outmanoeuvred by Gordon Brown, prime minister, who last week labelled Mr Cameron “a novice”.

Mr Cameron said instead of nationalising B&B it should have been put under Bank of England control, leaving creditors, including bondholders, exposed to risk, not just taxpayers.

The Tories broadly support banking reform legislation, to be published in October, to give the Bank of England such powers, but argue the government has been too slow in bringing it forward.

However, the Treasury insists it can spread any risk in a nationalised bank to other creditors under existing emergency legislation, brought in following Northern Rock’s near collapse.

Yvette Cooper, chief secretary, said the Tory plans were “incoherent and irresponsible” and that Mr Cameron’s opposition to nationalisation would jeopardise financial stability.

“That is completely irresponsible and just misunderstands the extent of the potential threats to the whole stability of the banking system when banks face serious problems,” she said.

Indeed the nationalisation of failing banks – something the government resisted for months in the case of Northern Rock – is now seen by Alistair Darling, chancellor, as a badge of the government’s competence and ability to take tough decisions.

George Osborne, shadow chancellor, will today use his conference speech to address the perception that a Tory government would be less inclined to take action in the City than Labour. Mr Osborne opposed Northern Rock’s nationalisation.

The chancellor argues that few in the City would now dispute that it was the right decision.