Rescue plan essential. Clamp down on massive bonuses welcome- Bowles

2.42.00pm BST (GMT +0100) Mon 29th Sep 2008

Sharon welcomes the US rescue package.

Commenting she said:

"This is a huge amount of money and if it were just bailing out irresponsible bankers I would be at the head of the protest to say NO! However, it is bailing out people from the effects of the credit crunch, and not doing it would be worse. The effects will also be felt in the UK.

"I particularly welcome the clamp down on massive pay outs to executives. We have been calling for restraint and better balance on this in the UK and Europe for some time, but I admit it has been difficult to see a way to enforce it. Now the crisis at least presents that opportunity and I hope that we can follow suit in UK and Europe and make lasting arrangements that do not get thrown out as soon as recovery starts.

"The UK rescue plan for Bradford and Bingley was also necessary" she said. "Unfortunately it did not present the same opportunity to impose generic constraints on the banking sector.

"With both Northern Rock and Bradford and Bingley the taxpayer is getting something for their money and I do not expect it all to be lost and, as with the US, the consequences of no action would be worse. It was right to sell on the deposit business of Bradford and Bingley because having a nationalised bank taking deposits with unlimited guarantees is not fair competition, nor fair for depositors elsewhere.

"I do think that the Government should move quickly to increase the general level of deposit guarantees. Ireland has just gone to €100,000 and it would be a reasonable target for the UK to be at £100,000. Those saving for retirement or for deposits for homes could easily have more than the present £35,000 on deposit with a single institution. It is ludicrous that they should have to spread it around and pay more charges or get lower returns, or not be able to invest in small banks for fear they would be allowed to go bust because they do not pose a systemic risk.

"We can all see now that there is even more consolidation into large and cross border banks. In time this will present us with problems of maintaining the possibility for new entrants to the market, and of course, something that I am heavily engaged in, ensuring a grip on EU wide systemic risk and equal treatment for cross border investors."