Lib Dems urge Brown: 'Move on from the banks and help households' » Bill payments » 24dash.com

Liberal Democrat leader Nick Clegg today urged the Government to move on from bailing out the banks and take action to help people struggling as a result of the financial crisis.

Mr Clegg and his Treasury spokesman Vince Cable issued a five-point package of tax cuts, interest rate reductions, help with repossessions and utility bills and financial advice for families who are feeling the pinch this winter.

While the Government's action to prop up the banks has probably averted a depression, Britain is still heading into a recession which will mean job losses, repossessions and money worries for millions, Mr Clegg warned.

He said: "Families are facing a difficult winter. Rising mortgage bills, the fear of unemployment and high heating costs mean that the shockwaves of the financial crisis are felt in households across Britain.

"When the banks were in trouble, they got rescued. Millions of families who are about to find themselves in trouble must be helped too."

Lib Dem plans to cut income tax for low and middle-income households are now "more urgent than ever", because they will put money in the pocket of people who are likely to spend it and consequently boost the economy, said Mr Clegg.

Because the party's plans are funded by cutting public spending and closing tax avoidance loopholes, they will not increase debt and are unaffected by the economic downturn, he argued.

Mr Cable called for interest rate cuts before Christmas going "substantially beyond" the 0.5% reduction announced last week by the Bank of England - possibly a further 1.5%, bringing the base rate down to 3%. He urged Chancellor Alistair Darling to encourage the Bank's Monetary Policy Committee to take account of the emergency economic conditions when it gathers for next month's rate-fixing meeting.

The Lib Dems also called for action to ensure that repossession is only ever the "last resort" in cases of mortgage default, with statutory requirements for lenders to offer financial advice and shared equity schemes to homeowners who get into trouble.

And they put forward a reform to utility pricing structures, so that units of gas or electricity become progressively more expensive the more you use, rather than cheaper as at present. This would mean that the poorest households, who use least energy, would pay for it at the lowest rates, while the higher rates would be reserved for those using most.

A network of financial advice centres should also be set up across the country to offer free, independent help to people facing money worries, said Mr Clegg. He estimated the cost of the centres, based on the existing network of Citizens' Advice Bureaux, at £100 million, jointly funded by Government and the financial services industry.

Lib Dems have backed the Government's package of support for the banking industry, though Mr Clegg today said it was "an irony to see Gordon Brown, the gambler-in-chief, now clamping down on the croupiers at the casino".

And he said he believed the Lib Dems' record of raising the alarm about the dangers of the credit and debt bubble would repay them electorally when voters looked back on the events of the past few weeks.

"I think this banking crisis will be to this Parliament what the Iraq War was to the last Parliament," Mr Clegg said.

"It will be the biggest issue by far and the response of the political parties will be as important to their credibility in the eyes of the public as was their response to the invasion of Iraq.

"I think it is revealing that on both these issues, the Liberal Democrats stand apart from Labour and the Conservatives in calling it right well before either of the other two parties realised the enormity of what the country was entering into.

"We are now showing day in, day out that we have a very legitimate claim to make by the time the election occurs that we called it right, made the right judgments and are leading the battle of ideas about how to get this country through this very difficult time."