Cameron urges chancellor to restore consumer confidence

Lines of people outside Northern Rock reveal the fragility of the domestic economy, says Cameron.

Monday, 17, Sep 2007 12:00

David Cameron has called on the government to reassure consumers as confidence in the UK banking system appears to be reaching breaking point.

In a keynote speech at accountancy firm KPMG, the opposition leader laid criticisms at the Treasury's door, insisting the chancellor must make a full statement to address public concern and outline how the government intends to counterbalance the effects of the ensuing “credit crunch”.

Referring to the Northern Rock crisis, Mr Cameron said he supported the Bank of England's decision to provide emergency support to the lender.

But, he stressed it was now incumbent upon Alastair Darling to answer looming questions and reassure Northern Rock's customers.

He said: “In a period of financial turbulence, it is vital that we establish the facts and avoid speculation.

“We need to know more about the chain of events that led to the Bank's intervention.”

Mr Cameron stopped short, however, of arguing parliament should be recalled, saying this would only heighten the general feeling of unease.

But, he did continue to put pressure on the government to open up a dialogue with the public and provide assurances to calm the storm.

Mr Cameron spoke of the dangers associated with an indebted national economy, warning Britain’s reliance on borrowing left “little room for manoeuvre” when shocks impacted the market.

He continued: “The lines of savers queuing to withdraw their deposits from Northern Rock serve to remind us just how fragile the stability of the economy can be.”

Mr Cameron contextualised this bleak image amid a set of economic proposals, claiming his party would put “stability and security” at the heart of fiscal policy if elected at the next general election.

As well as aiming to protect the public’s jobs and mortgages, Mr Cameron claimed he would make addressing the gender pay gap a priority.

This, he said, would benefit the larger economy and enhance Britain’s ability to compete on the international stage.

He advocated introducing pay audits for firms found guilty of unfairly disadvantaging women in terms of pay.

The Liberal Democrats also jumped to criticise the government over the Northern Rock situation.

Speaking today, shadow chancellor Vince Cable said: “The water is now pouring through the defences after the near collapse of Northern Rock.

“I have been warning of this for over three years. But repeatedly, and complacently, Gordon Brown denied that there was a problem. Gordon Brown must take personal responsibility.”

The chancellor has spoken on several occasions over the weekend. He has denied claims the government failed to act swiftly enough to avert the disaster.

Speaking to the BBC’s Today programme, Mr Darling said: “The reason I authorised the BoE to take action…at the end of last week was because Northern Rock did have this difficulty in getting the funds.

“What is encouraging from our point of view here in the United Kingdom is that the fundamental positions – the strong economy, the fact that we have got low interest rates and low inflation which we haven’t had – do stand us in good stead. That is very, very important.”

Consumers have now withdrawn a reported £2 billion from Northern Rock causing share prices to plummet by 40 per cent.