FINANCIAL CRISIS SHOWS NEED FOR STRONG ACTION - WELSH LIBERAL DEMOCRATS

10.16.04am BST (GMT +0100) Thu 9th Oct 2008

Speaking ahead of the Second Reading of the Banking Bill, Liberal Democrat Shadow Secretary of State for Wales Roger Williams MP and Welsh Liberal Democrat MP for Montgomeryshire Lembit Öpik have called on the Government to ensure that the emergency measures taken to support banks don't obscure the need to help ordinary families through the difficult months ahead.

On Wednesday morning it was announced that the Government would be committing £50 billion towards part-nationalisation of banks, as part of a £500 billion package to stabilise the economy, a move which has received cross-party support. The £50 billion will be tied into conditions set by the Government, such as the reining in of executive pay.

Next week the Banking Bill, which will impose a statutory duty on the Bank of England to consider financial stability, and will make it easier for the Government to make interventions in financial institutions, will come before the House of Commons.

Last week the Liberal Democrats launched an Economic Recovery Plan which includes measures to:

· Cut the basic rate of income tax by 4p funded by increased green taxation, while cutting wasteful Government spending with a view to implementing further tax cuts for those on low and middle incomes.

· Stop unnecessary repossessions by allowing families struggling with repayments to sell all or part of the equity in their house and rent it back from a housing association or private firm to help keep them in their home.

· Reform the banking sector so that banks would have to hold more capital in times of boom and less in times of recession to reduce the effect of boom and bust. Curb the excessive bonus culture which rewards excessive risk-taking.

· Cut energy bills by compelling companies by forcing them to reinvest the £9 billion windfall profit they received from the Emissions Trading Scheme on cheaper bills.

Commenting, Roger Williams said:

"It is a concern that we find ourselves in this situation, but I think the Government has taken the right action to secure the financial stability of the country.

"That said, now that banks are being propped up by the taxpayer, they have a responsibility to clean house and use our money wisely. The culture of excessive bonuses for short-term high risk investments must end.

"We can't forget that the most crucial thing we must ensure is that people are given help when this crisis starts to affect the real economy. We need to reduce the tax burden on people on low and middle incomes, and help vulnerable consumers with rising energy bills.

Montgomeryshire MP Lembit Öpik added:

"We support the action being taken by the Government to secure financial stability, but we also need to take action to ensure that we never end up in this situation again.

"The Banking Bill is emergency legislation to try and get the situation under control, but the Government should listen to all ideas that are raised during the course of the debate, and consider suggestions wherever they come from. This issue is too important to play party politics with.

"It is all too easy to focus on the dramatic events we are seeing in the City, but we must not lose sight of the fact that it is ordinary families who will be hit as a result, and we must start putting in place measures to help protect people's homes and livelihoods."

Note:

The full text of the Liberal Democrats' economic recovery plan is available here:

http://www.libdems.org.uk/assets/0000/8906/economic_recovery_plan.pdf