PM plays down new state cash for banks

Published on Sunday 4 January 2009 00:29

GORDON Brown last night played down the prospect of a fresh injection of taxpayers' cash to the banks, insisting it was "not the first thing on any agenda".

The Prime Minister spoke out amid reports that a second rescue package was among measures being considered by the Treasury in a bid to spur a revival of bank lending to businesses and housebuyers.

The Tories said any such move would show the Government's existing 37bn billion recapitalisation package – a key part of Brown's plans to get the UK out of recession – had proved an "expensive failure".

Brown, in an interview with a Sunday newspaper, agreed that further action was required: "Clearly we have banks that were willing to take large numbers of risks a year or two ago and people are now averse to risk, so we have got to create the conditions in which it's possible for banks to resume lending."

But asked if that might mean more public money being handed to financial institutions, he added: "That is not the first thing on any agenda. The more important thing is getting the resumption of lending by other means."

The Prime Minister also reiterated his aim to make jobs his top priority for 2009 – after the British Chambers of Commerce predicted unemployment would top three million this year.

He will host a summit on the issue on January 12 at which initiatives could include giving state support to firms offering extra training for workers forced to switch to part-time employment.

Major public works projects – such as school repairs, transport improvements and the creation of a high-speed broadband network – would provide around 100,000 new jobs, he said.

And the expansion of the "green" economy would also play a role. "Rather than pushing the environment into a lower order of priority, the environment is part of the solution," he said.

Asked about the potential for increasing British troop numbers in Afghanistan, something incoming US President Barack Obama is likely to request when he takes office this month, the PM said British forces were already making a "very big contribution". "The first question everybody starts by is saying: 'What about the numbers?' But actually the first question is purpose and objectives and how we can achieve them," Brown said.