Nick Clegg: Scandal of our bank money being used to put jobs at risk

The Royal Bank of Scotland is largely owned by the taxpayer, also known as you and me. And it is lending hundreds of millions of pounds through a complex banking consortium to Kraft, the American food giant, to help its bid to take over Cadbury, a move that even the chairman of Cadbury admits will "inevitably" lead to job losses.

Many of those could be at the Cadbury factory in Sheffield, which could be at risk because of the takeover.

What makes RBS involvement in this takeover deal even more galling is that there are tens of thousands of British businesses crying out for money to be lent to them to help them keep their staff on, or take on more workers.

Bank lending has still not recovered since the credit crunch.

Businesses are having to pay more for their loans, having to stick to complex and restrictive "covenants" to keep the banks happy, or even having their loans and overdrafts withdrawn altogether.

I can't imagine how chief executives and finance officers of small businesses across Yorkshire are feeling right now, especially if they bank with RBS, knowing money they desperately want access to is being channelled to Kraft.

It's not that I want to vilify Kraft; but their record on taking over traditional British manufacturers isn't reassuring, and it's right to be sceptical towards their assurances that Cadbury jobs will be safe.

In 1993, Kraft took over Terry's, the makers of the famous Chocolate Orange. They said the historic factory in York, which had been running for 250 years, since the company was first founded, was safe. But it did close, with hundreds of people made unemployed and forced to look elsewhere. York, once the nation's capital of chocolate manufacturing, was left with only the Nestl factory still in operation.

This is a globalised world. All businesses have to be competitive, and, of course, we shouldn't try to pull up the drawbridge and prevent international businesses from coming to Britain or buying up companies where it is appropriate. Businesses from overseas that are ready and willing to invest in Britain should be welcome here.

But there is a simple principle at stake, here. It is absolutely unacceptable for banks that have been all-but nationalised to act

against the good of the British people.

What is Gordon Brown thinking?

The banks' first priority should be supporting British businesses to

grow, not supporting deals that put jobs at risk.

There are nearly two-and-a-half million people out of work, and though this week we had some good news, with a slight fall in the headline figures, it is still far too soon for complacency. Every job counts.

On Wednesday, I explained this to the Prime Minister, but he dismissed the concerns of thousands of people, insisting the Government shouldn't be intervening in what banks do on a day-to-day basis.

After everything that has happened in our banks, he still thinks

they're like any other business. He couldn't be more wrong.

Other businesses aren't bailed out by taxpayers to the tune of billions of pounds. Other businesses haven't had to call on the goodwill of the British people for their very survival. It's shameful enough that Gordon Brown hasn't managed to stop the banks gorging themselves on bonuses. That he's happy for them to use the bail out money on deals that put British jobs at risk simply beggars belief.

We own 70 per cent of RBS, and will soon own 84 per cent. Taxpayers are represented on the board. Why, then, are those representatives not pushing the bank to do what's right? We have given the banks support totalling more than 850bn – more money than most of us can even imagine.

It is equivalent to more than 14,000 from every man, woman and child. That investment was needed to stop our whole banking system from collapsing and bringing down the rest of the economy.

But now that we own many of the banks and are propping up the rest, we can and must insist they change their behaviour and work for Britain, not for themselves and their grotesque staff bonuses.

Even if it's too late to stop the Kraft-Cadbury deal, it is now time for the Government to order our representatives to speak out at board meetings and insist the banks lend to viable businesses again

immediately.

We cannot afford to lose more jobs, in Yorkshire or in the rest of Britain, because of the mistakes of the banks. It is time for action.

Nick Clegg is the leader of the Liberal Democrats, and MP for Sheffield Hallam.