Cameron: UK must adopt American economic system
The UK must adopt American style insolvency rules, David Cameron has suggested.
Outlining his party’s economic plans at the CBI today, the Conservative leader described Gordon Brown as being “unwilling to give a full answer” to the UK economic troubles, instead blaming international pressures.
“I believe it is time for Gordon Brown to stand up and take responsibility and get the economy back on track. That is what we are doing.”
He added the government had been on “a decade-long joyride with the economy leaving it battered, bruised and in need of repair”.
Repair plans described by the Tory leader include a version of the US Chapter 11 insolvency rules which allow firms struggling to continue trading with the backing of a majority of creditors.
He claimed it would see “fewer companies in liquidation”.
But well-respected Liberal Democrat economics spokesman Vince Cable said the US system only helps incompetant executives.
“The Conservatives claim to support free fair and competitive markets, yet they now seem hell bent on introducing a measure which only helps incompetent executives,” he said.
“Chapter 11 allows people who have mismanaged their companies to continue to run them free from their debt and pensions obligations.
“It not only rewards failure, but as the debacle of the US airline industry showed, it distorts the market and can be used as a cynical ploy for executives to weasel their way out of paying the pensions owed to their employees.”
For the property market, Mr Cameron supported the government’s £50 billion provision of liquidity to lenders but called for more help for first-time buyers.
He proposed changes to the stamp duty system to provide up to 90 per cent of first time buyers relief from the tax.
The Conservative leader has called on the government to ensure plans for saver protection for the first £50,000 of deposits – to prevent another Northern Rock – to be introduced before the summer recess of parliament.
“Savers need reassurance their cash is protected. They should act now before recess.”
Mr Cameron demanded more powers for the Bank of England to step in to step a future Northern Rock crisis – as the Federal Reserve did in the US over the Bear Stearns collapse.
He also pledged to reduce the tax burden, promising to increase the size of the state less than the growth of the economy over an economic cycle.
“There is no magic wand to bring food and gas prices down, but a Conservative government will stop it getting worse.”
