The political pressure on the government over Northern Rock escalated yesterday, as the Liberal Democrats repeated their call for an urgent nationalisation of the bank and the Tories warned such a move would be a 'monumental failure'. Financial Times, Daily Telegraph

The disintegration of any consensus over the bank was also accompanied by broader political arguments over the extent to which mortgage lending should be regulated.

The diametrically opposed advice to Alistair Darling on Northern Rock from his political opponents highlights the minefield the chancellor is treading, with any loss of the billions of taxpayers’ money lent to the Rock certain to cause a painful fallout at Westminster.

DavidCameron used a meeting with the Council of Mortgage Lenders to call on banks to “step up to the plate and help ease the burden on hard-pressed homeowners” through voluntary measures, such as switches to interest-only loans. But the industry body urged him instead to reform the benefits system to help 'redress the policy mistake' by the Conservatives in 1995 in cutting income support for mortgage interest.