HOWZAT

Asked if he could rule out tax increases, Mr Cameron said: “If we win the election, we are clearly going to face an extremely tough time. No responsible opposition can ever rule things out. Of course I can’t rule that out.

“But if we hold down the growth in public spending over a whole economic cycle, actually we should be able to give people back some of their hard-earned money.”

George Osborne the Shadow Chancellor, expressed concern that if B&B was nationalised, the taxpayer would be taking on a “huge risk” and could lose a lot of money.

“I think there is a better route. This choice between either a private sale, which is obviously the thing you most want to arrange, or nationalisation, where the taxpayer bears the full cost, is not great range of options,” he said.

"There should be a third option, which is a Bank of England-led reconstruction where, in the end, the large institutional creditors to the bank bear the risk, not the taxpayer.”

“I think people will wonder why on earth the British taxpayer is being asked by Gordon Brown to bear the full risk of the mistakes that were made, not just by the management of Bradford and Bingley but also by the regulatory system that Gordon Brown set up.”

Chief Whip Geoff Hoon accused the Tories of “trying opportunistically to score points”.

He said that the Prime Miniser and Chancellor of the Exchequer had been working on the issue throughout the weekend.

“We have taken tough, decisive action to sort out the situation and I am confident that in due course there will be a statement from the Treasury about Bradford & Bingley,” he said.

Vince Cable, the Liberal Democrat treasury spokesman, said the bank’s problems were the result of a “collapsing housing bubble built on a toxic mix of buy-to-let speculation and self-certified mortgages”.

Calling for a full, independent audit of B&B’s accounts, Mr Cable said: “I suspect that a substantial proportion of the bank’s assets are of poor quality because of loose self certification and because of the speculative element in buy to let.

“It’s important that the taxpayer is given a full and honest statement of what it is that the Government has taken on, even recognising that there was no alternative to public ownership following the collapse of market confidence.”

Steven Lansdown, chairman of independent financial advisors Hargreaves Lansdown, said B&B shareholders were likely to be left out of pocket.

He said: “What the Government are doing by taking on Bradford & Bingley is they are protecting the depositors, the savers, and they are looking to sort out the loan book.

“I don’t think they will be too interested in what the shareholders’ outlook is, because, after all, that is the risk you take when you invest in a company.”

But shareholders were angered at the potential move. One, Jon McKnight, called it “the most blatant case of legalised bank robbery this country has ever seen”.

“Surely, at the very least, B&B’s board should have called an extraordinary general meeting for shareholders to decide the way forward. It is customary in this country for owners to be consulted on what becomes of their property before it changes ownership. Anything else is classed as theft.”

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