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THE WEEKLY WORLD EDITION OF The Daily Telegraph AND The Sunday Telegraph
July 28 - August 3 2010 No. 992
:: COMMENT P18
Alex ‘Hurricane’ Higgins dies at 61
Venables jailed Bulger killer admits child porn charges :: NEWS P5
By Jonathan Russell and Andrew Porter BANKERS are to be forced to lend to businesses or risk losing their bonuses under plans to be outlined by Vince Cable, the Business Secretary.
He will propose a “carrot and stick” approach to ensuring that banks maintain lending to struggling enterprises.
The plans were in one of two green papers on the banks and financial services published by the Coalition on Monday. The second paper, from the Treasury, will outline measures to strengthen regulation of the banking sector.
The measures are part of the Government’s attempt to ensure that the country does not endure another credit crunch amid nervousness in the markets.
But it is the Green Paper from Mr Cable’s Department for Business that could prove most controversial. It is clear that the Business Secretary has run out of patience with banks. “I don’t think the banks get it,” he said on Sunday. “We are very worried about their behaviour. They are not acting in the national interest.
“At the moment we are talking to them in an amicable way and we are monitoring them, but if this doesn’t work there are combinations of carrots and sticks that can be employed.
“What we would question is whether banks should be paying out dividends and bonuses when that money could be used to … support small business lending.”
Mr Cable will threaten to impose a new code on all banks rather than opt for a voluntary one applying only to those banks majority-owned by the state.
A source close to the Business Secretary added: “The pressure will be kept up on bonuses. It is important that the banks do not think this is an issue that has gone away.”
Mr Cable’s plans to target bankers and their bonuses will be seen as emanating from Liberal Democrat rather than Conservative ideology and risks putting him at odds with Tory colleagues in government as well as the City.
The Lib Dem members of the Coalition favour a more interventionist approach to banking. Having been bailed out by the taxpayer, they argue, the banks have an obligation to lend. The Tories regard it as contradictory to try to control banks while encouraging them to build up their balance sheets.
Figures from the Bank of England show that lending to businesses has been falling steadily, reaching £25.4 billion from April to June this year.
The move to allow Mr Cable to publish a Green Paper on the same day as Mr Osborne’s department is likely to be seen as a sop to the senior Lib Dem.
David Cameron and Mr Osborne have gone out of their way to accommodate Mr Cable, who disclosed on Sunday his continuing discomfort at being part of a Coalition government.
“Government is not fun,” he said. “It is a huge responsibility because the decisions we are taking affect people’s lives.
“If I go around looking apprehensive then there is good reason for it — the agenda is not fun.”
Widely considered to be one of the least willing members of the Coalition, Mr Cable has been touted as the most likely minister to quit over differences in political philosophy.
“It is difficult,” he added. “I don’t think any of us pretend it is not. Orientating myself into co-operation has required effort and concentration.”
In his Green Paper, he will outline measures such as “lending agreements”, effectively linking lending levels to bankers’
Continued on page 2
Joe Cole coup Londoner denies signing for Liverpool is all about money :: SPORT P46
Brokeback row Tory rebels rally around David Davis :: NEWS P2
STEVE DAVIS this week led the tributes to Alex Higgins, the fastliving, fast-playing snooker idol who has died at the age of 61 after a long battle with throat cancer.
Davis, whose rivalry with the “Hurricane” spanned two decades, mourned the passing of “a genius” and “a rebel”, whose flair for the game thrilled audiences and inspired a generation of world-class snooker players.
A heavy drinker and smoker, in 1998 Higgins had a cancerous growth removed from his throat.
His overall earnings from snooker were reckoned to be about £3million, but he was virtually penniless at the end of his life.
Higgins won the world championship twice, in 1972 against John Spencer and in 1982 against Ray Reardon. Obituary, next week
‘You’re not going out dressed like that,
young lady’ After the French ban, one woman puts the case for the burka. Features, page 24-25