Time to split up RBS, Cable tells Cameron

VINCE Cable, the business secretary, has called for the break-up of Royal Bank of Scotland in a leaked letter that shows a withering view of the direction of the coalition.

The Treasury should use the loss-making RBS, which is 82 per cent taxpayer-owned, to create a bank dedicated to boosting business lending and supporting exports, Cable (pictured) said in a letter to David Cameron and Nick Clegg.

“My suggestion is that we recognise that RBS will not return to the market in its current shape and use its time as ward of state to carve out of it a British Business Bank with a clean balance sheet and a mandate to expand lending rapidly to sound business,” he said.

In a four page letter the Liberal Democrat MP, a regular critic of bank lending levels, said the government needed to explain how British people will “earn our living in future” and highlighted a series of growth industries such as advanced manufacturing and low carbon technology.

He also said the government lacked a “compelling vision” for the future beyond sorting out the “fiscal mess”.

The letter, dated 8 February, angered Conservative backbenchers who have clashed with Cable.

Last night Cable told the BBC it “certainly wasn’t a comprehensive attack on the government’s economic policies”. Chuka Umunna, Labour’s shadow business secretary, said it “underlines the extent to which the department of business lacks clout and has become marginalised”.