Tories urge small business help

In an article in the Observer, Mr Cameron said banks must treat small businesses “fairly”.

He added that further Conservative plans to help families, homeowners and entrepreneurs would be laid out “in the coming months”.

“We intervened to prevent the beating heart of our economy – the financial system – from collapsing. We’ve got to do the same for its lifeblood.

“Small and medium-sized businesses employ over 13 million people and turn over £1,440bn a year.

“In the short term, we’ve got to help families up and down the country with proposals to get them through the downturn.

“In the long term, we’ve got to repair our economy by getting the public finances back in order.”

Rising repossessions

Mr Darling said the government would put money into employment-creating sectors such as the 2012 Olympics and London’s Crossrail project.

He told the Sunday Telegraph: “At a time like this, it would be wrong to start taking money out of the economy, in terms of cutting back on spending, in terms of tax.

“You do not do this when an economy is slowing down.”

He said the spending would be financed by extra borrowing, and justified it by pointing to debt reductions in the last 10 years.

The Chief Secretary to the Treasury, Yvette Cooper, has meanwhile called for banks and building societies to have a more responsible approach when home owners default on their mortgages.

The government is working on ways to tighten the rules when courts have to decide on repossessions.

“We need to do everything that we can to keep people in their own homes,” she said.

The Council of Mortgage Lenders is predicting that the number of homes repossessed this year will reach 45,000, up from 26,000 last year.

Ms Cooper said there was “clearly going to be tougher times ahead” and that no government could prevent a slowdown in the light of the current global problems.

But she said: “What we can do is step in and, by dealing with the problems in the banking system, prevent the worst of the credit squeeze hitting people.”

The chancellor said the days of taking risks with loans were over.

“I do not want us to get back into a situation where people are given loans they can’t afford or where the security on offer simply isn’t enough.

“Banks need to learn that taking excessive risks doesn’t do the country any good.”