Cable: Government treating recession 'like a dose of the flu'

Any early Government sell-off of Northern Rock or its stake in other banks would be "disastrous", Liberal Democrat treasury spokesman Vince Cable said today.

Mr Cable told the Local Government Association annual conference he did not know whether a report the supermarket giant Tesco could launch a bid for Northern Rock was true.

But he told delegates: "It's very clear that they (the Government) want the banks off their hands as quickly as possible.

"In the current context, this would be absolutely disastrous."

Mr Cable told the representatives of local authorities across England and Wales the experience of other countries was that governments often had to retain control of banks for up to 10 years in these circumstances before they got a return on the investment.

He told the conference in Harrogate how the Government had treated the economic crisis like a "dose of the flu" when the correct analogy was with a heart attack.

Mr Cable also dismissed what he called an "unholy alliance" of bankers, ministers and commentators who were talking signs of "green shoots" of economic recovery.

He said: "There is a massive public finance crisis pending here."

And Mr Cable warned the local government delegates listening to him that councils would be heavily hit by any Government cuts.

He predicted local authorities would be used to do the Government's "dirty work" for it.

"It's going to have major consequences for local government," he said.