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Cameron urges bankruptcy support Cameron urges bankruptcy support
(about 8 hours later)
The Tories are to look into introducing elements of US bankruptcy protection to give UK firms "breathing space", David Cameron is expected to say in a speech. US-style bankruptcy protection should be introduced to protect firms at risk from the impact of the credit crunch, Conservative leader David Cameron says.
The Tory leader will outline changes his party would make to protect firms and staff during the credit crunch. A Tory government would adopt a British version of the chapter 11 scheme which gives businesses a "breathing space" to establish new funds and save jobs.
He will tell the CBI they will consult on introducing the "best aspects" of US "chapter 11" bankruptcy protection. Mr Cameron says a "full blown plan for economic recovery" is needed.
Meanwhile, shadow chancellor George Osborne will say "fixing" society is integral to economic success.Meanwhile, shadow chancellor George Osborne will say "fixing" society is integral to economic success.
In a speech to business leaders, Mr Cameron is expected to say that those most in danger from a "struggling economy" must be helped - including employees. In a speech to business leaders, Mr Cameron is saying that those most in danger from a "struggling economy" must be helped - including employees.
'Fundamentally sound' Cutting taxes
He will argue that the credit crunch means more companies are finding it hard to get hold of the funds they need to survive - and are increasingly facing liquidation, leading to job losses. He argues that the credit crunch means more companies are finding it hard to get hold of the funds they need to survive - and are increasingly facing liquidation, leading to job losses.
"This isn't right, not for the companies, many of which are actually fundamentally sound," he will say. "In America they have Chapter 11 which is a stay of execution," he told BBC Radio 4's Today programme.
This change will ensure that fewer good companies end up in liquidation David Cameron We ought to be taking action now, showing leadership now to try to save those jobs David CameronConservative leader
He will announce a consultation on "taking the best aspects" of US "chapter 11" bankruptcy protection - which gives struggling firms court protection as they try to come to a deal with creditors - to give British companies "breathing space". "Instead of companies going straight into liquidation and having to lay off staff, they get a stay of execution and they can be restructured to try to save the business, to try to save the jobs.
"This change will ensure that fewer good companies end up in liquidation - and less people lose their jobs through no fault of their own," he will say. "Now that doesn't actually cost taxpayers money, but at a time when we've got economic difficulty and at a time when companies may get into these sorts of problems, we ought to be taking action now, showing leadership now to try to save those jobs."
But he will add that not all companies should be saved. While Mr Cameron concedes that not all companies should be saved, he said "the least we should do" is to look at what other countries do to save jobs.
'Broken society' "At this point in the economic cycle, what the government ought to be doing is cutting taxes, giving a fiscal stimulus to the economy," he said.
But he argued that the government cannot do this because its borrowing is so high and it has spent all the money in the good times, leaving the "cupboard bare".
Welfare revolution
US companies filing for chapter 11 keep control of their assets and daily operations as negotiations continue in the bankruptcy court.US companies filing for chapter 11 keep control of their assets and daily operations as negotiations continue in the bankruptcy court.
The Conservative plans would allow courts to grant protection to a UK business that could not pay its debts, but had a good chance of restructuring successfully.The Conservative plans would allow courts to grant protection to a UK business that could not pay its debts, but had a good chance of restructuring successfully.
FROM THE TODAY PROGRAMME More from Today programme
The party says similar restructuring deals do take place in the UK, but without set rules can be very inefficient.The party says similar restructuring deals do take place in the UK, but without set rules can be very inefficient.
The proposals would not have applied to Northern Rock, they say, as financial institutions are regulated separately.The proposals would not have applied to Northern Rock, they say, as financial institutions are regulated separately.
In a separate speech, Mr Osborne will say that "fixing our broken society is integral to building a strong economy". In a separate speech later, Mr Osborne will say that "fixing our broken society is integral to building a strong economy".
He will tell the Centre for Policy Studies the quality of British education has to improve so Britain can compete in "the age of the knowledge economy" and the Conservatives would aim to "bring about a revolution in our welfare system".He will tell the Centre for Policy Studies the quality of British education has to improve so Britain can compete in "the age of the knowledge economy" and the Conservatives would aim to "bring about a revolution in our welfare system".