Debts & Loans

David Cameron will tonight apologise for the Conservative party's failure to anticipate the recession. The Tory leader's move is calculated to highlight Gordon Brown's unwillingness to issue an apology of his own.

In an interview given shortly before a keynote speech to Birmingham business leaders, in which he will admit the Tories should have realised banks were accumulating unsustainable debts, he said: "Of course I am sorry we got some things wrong.

"We were right to call time on government debt, but should we have said more about banking debt and corporate debt."

His comments are intended to embarrass Brown, who has refused to apologise for decisions he took as chancellor and prime minister that could have exacerbated the effects of the recession.

He has declined to say sorry despite coming under pressure to do so.

Brown strongly believes he should not apologise because his decisions were not to blame for the current situation. Cameron said he did not accept the prime minister's often-stated view that the recession was caused by subprime lending in the US and that British factors were not involved.

"I take a different view – our banking system is not separate from our economy, it is a reflection of it," the Tory leader added. The Conservatives have argued repeatedly that Britain was ill-prepared for the recession because of high levels of personal and government debt.

In the past, Cameron, and other Tories, have tried to take credit for flagging up these problems. But the Conservative leader will tonight adopt a new approach, saying his party was also at fault because it should have done more to highlight the problems being stored up by the extent of bank borrowing.

"The unsustainable debts in our banks are a reflection of unsustainable debts in our households, our companies and our government," he will say. "But, if I'm honest, I have to admit that we – the Conservative party – didn't see this as early as we could have. "Do I believe we did enough to warn about the rising levels of corporate debt, banking debt and borrowing from abroad? No.



"And there are other areas of economic policy where I look back now and think we would have done it differently if we had the time again. "For example, while we warned that it was wrong and complacent to claim that boom and bust had been abolished ... we based our plans on the hope that economic growth would continue."

In the speech, which Cameron will follow with a series of others intended to show that the Tories have policies to deal with the recession, the Tory leader will say all parties signed up to the same "cosy economic consensus", leading them to accept Brown's optimistic growth forecasts.

And in an implicit criticism of previous Conservative adminstrations, he will add that successive governments made the mistake of accepting the idea that "as long as the overall economy is growing, the balance of that growth between different regions, industries and people doesn't really matter".

Cameron will also give a strong hint that the Tories would vote against any further tax cuts proposed by Labour.

Highlighing his decision to oppose last year's cut in VAT, he will say : "We will need more of that discipline in the months and the years ahead." Brown has accepted that City regulation should have been tougher in the years leading up to the recession.

But although ministerial colleagues have argued in private that he would find it easier to engage with voters if he were to express some remorse, Brown has consistently refused to apologise. He feels he created an environment of low interest rates and low inflation, and that the recession has been caused by an unforeseen global financial crisis with its roots in the US.