Mervyn King stepped up his campaign against taxpayer guarantees for mortgage funding on Thursday, saying they would impede necessary restructuring in banks, prove expensive and were likely to be long-lasting.

The Bank of England governor announced that he would set out a new interim liquidity support facility for banks next week, so that they would still be able to “access liquidity insurance” after the initial Special Liquidity Scheme window closes on October 21. He would simultaneously consult on a permanent liquidity facility.