In a keynote speech to Urban Forum's annual conference, Liberal Democrat treasury spokesman, Vince Cable MP, said the long term health of the UK economy needs more community banking, a greater role for credit unions and community-based financial institutions.

Speaking at Urban Forum's annual conference, It's The Stupid Economy, Cable said the banking sector was too large in the UK, compared with other countries, such as Germany and France, and needed "a more diverse, competitive, banking sector, which includes stronger mutuals, local community banks and credit unions."

Describing the UK economy as having had "a massive heart attack", he said that no-one could yet tell whether the crisis was passing and that the economy was now "in intensive care".

Cable called for greater transparency and more responsible lending, favouring a traffic light system to manage risk.

Echoing a similar sentiment expressed by Urban Forum's Chief Executive, Toby Blume, he said that banks should pay a premium for the protection they receive from the taxpayer.

Cable acknowledged that the issue of bankers' remuneration was symbolic but did not provide the systemic reform that was required.

Urban Forum chief executive, Toby Blume, said: "Throughout the financial crisis, Vince Cable has offered astute analysis on its causes and a credible advocate for fundamental reform. We welcome his recognition of the importance of more community-based banks and financial services to rebuilding our economy.

"Let us hope that Ministers do not allow this once in a generation opportunity to reform the system slip through our grasp."

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