Redwood calls for end to 'cuckoo banks'

Conservative MP John Redwood has called for the Budget to rebuild the UK's "lost reputation" for prudent management of the economy.

He urged the government to make it clear that no further taxpayer subsidy or capital will go into the economy and that cash generation deadlines should be put in place for the banks.

Warning of the dangers of "large cuckoo banks" currently held in the "public sector nest", Redwood instead called for the introduction of more, smaller institutions that can fend for themselves.

He said: "They are too big, have access to too much taxpayers' money, and are too expensive and running too much risk for taxpayers."

He urged the government to tackle the "wasteful and undesirable spending" it had specialised in.

"Out should go unelected regional government, expensive centralised computer programmes, some of the army or spin doctors, the glossy brochure industry, the large advertising programmes and much else."

Additionally he called for a freeze on all new recruitment other than front-line employees.

Redwood, a former banker and influential voice on Tory economic policy, previously made his case in a piece for the Telegraph.

He warned that broken banks cannot be mended by "tipping every larger quantities of public money at them" – adding that toxic debts cannot suddenly be transform into "public treasures".

Redwood explained: "We need a clear exit strategy; instead, we have a couple of large zombie banks, too big to be allowed to go under, too weak to do much new banking, and too expensive for the taxpayer to maintain in the style to which they are accustomed."

Read John Redwood's full statement on the 2009 Budget here.