Lib Dem Lord Oakeshott stands by criticism of bank deal

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Lord Oakeshott
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Lord Oakeshott will no longer be speaking for the Lib Dems on banking and financial matters

A Lib Dem peer has stood by his criticism of the government's deal with the banks, saying they had failed to "pin them down" on lending and bonuses.

Lord Oakeshott quit his role as a Lib Dem Treasury spokesman in the Lords in protest at the agreement.

He said lending commitments were "weak and waffly" and "viable" firms were being starved of funds. He said would continue to speak out on the issue.

The Lib Dems said the peer had left his role by "mutual agreement".

Lord Oakeshott, a former City financier who advised Business Secretary Vince Cable while the Lib Dems were in opposition, was not a government minister but continued to speak for the party, in an "informal capacity", on banking and financial matters.

'Wriggle room'

But he stood down from that role on Wednesday after branding Treasury negotiators "incompetent" and demanding "radical surgery" to cut City bonuses.

He said the "settlement" with the banks would not stop multi-billion pound bonuses being paid - including to the bosses of taxpayer-funded companies - and the Treasury had shown "an awful combination of arrogance and incompetence" in negotiations.

Speaking to the BBC, Lord Oakeshott defended the comments and suggested he would continue to speak out on the issue.

"This particular agreement does not match up to our commitment on unacceptable bonuses and I am fighting for that," he told BBC Radio 4's Today programme.

He said the commitment to increase loans to businesses from £179bn to £190bn this year and lending to small firms by 15% to £76bn was "weak and waffly" and contained "vast wriggle room". He said banks were continuing to "threaten to pull the plug" on viable businesses.

"Small business people will tell you what is going on" he said. "That is why I am so cross banks have not been pinned down to do the job."


He said David Cameron had "sent out the wrong messages" during the negotiations with the banks and had given the impression that the government was desperate to do a deal.

"The only way you get a good deal with banks is if they don't think you have to do a deal," he added.

He said he supported Lib Dem policies in general and the party's role in the coalition, saying his main target was the Treasury - which he said had a track record of mishandling important issues such as Northern Rock and the collapse of Iceland's banking industry.

Chancellor George Osborne has defended the bank lending and bonuses package, saying it would boost economic recovery.

Mr Cable has described the agreement as "reasonable" but said bonuses remain "extraordinarily large" and said bank profits needed to be looked at as part of a wider review of the structure of the industry.

Labour, meanwhile, have said the peer had been sacked for "daring to tell the truth".

The British Bankers Association - which speaks on behalf of the leading banks - said the industry had made "unprecedented commitments" on lending and were "stepping up to the table" to help support the economic recovery.