Darling ready to help other banks

1:04pm Sunday 5th October 2008

Chancellor Alistair Darling said he was ready to offer further assistance to individual banks which get into difficulties.

Mr Darling said that the Government was providing generalised support to stabilise the banking sector as a whole, but was also prepared to take action where specific banks are at risk of collapse, as it did with Bradford & Bingley and Northern Rock.

He told BBC1's Andrew Marr Show that the Government was ready to take "pretty big steps that we wouldn't take in ordinary times" in order to ensure that Britain gets through the current crisis.

But the Chancellor said he would resist pressure to scrap the Bank of England's inflation target to allow for cuts in interest rates, insisting that it was vital to maintain economic discipline even in bad times.

And he indicated that he was ready to let state borrowing rise higher rather than increase taxes, arguing that now was not the time to take money out of the economy.

Setting out his approach to emerging difficulties in the financial world, Mr Darling told Andrew Marr: "It's important that we take action across the piece. That's why, through the Bank of England, we have put billions of pounds into the system to help the whole banking sector.

"But also you do need to be ready to take specific action - as we did with Bradford & Bingley last weekend, as we did with Northern Rock.

"The point I'm making is, it's important to take generalised action as well as being ready to take particular action if you get a particular problem with an individual bank."

Shadow chancellor George Osborne told the Andrew Marr Show the practice of helping banks on a case-by-case basis was "running out of road".

He called for a "much bigger solution" - possibly including the Government taking stakes in several banks as happened in Sweden in the early 1990s.