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Fully nationalise RBS, says Nigel Lawson

Banks' threats to leave the UK are "a load of nonsense", says the former chancellor.

The former chancellor of the Exchequer Nigel Lawson, who sits on the parliamentary commission on banking standards, has urged George Osborne to fully nationalise the Royal Bank of Scotland. The bank is currently 82 per cent owned by the UK government.

Lawson said that as a result of the Libor scandal, RBS is expected to be fined at least £500m and may not pay bonuses in 2013.

In an interview with the Financial Times, Lawson said that lenders should stop worrying about “losing star performers” in the event that bonuses are cut. He said that the youthful energy needed to be a trader was not in short supply: “They’re all of them easily replaced, particularly in today’s labour market.”

Criticising the appointment of Stephen Hester as RBS's chief executive by the last Labour government, Lawson said: “It is absurd to put a lifetime investment banker in charge of an entity which is overwhelmingly a retail and SME [small and medium enterprise] type bank.”

Lawson urged Osborne to take into consideration the advice of the cross-party banking commission chaired by Tory MP Andrew Tyrie to enhance retail banking. He said that there was a “huge amount of bank lobbying” over the implementation of Vickers commission proposals, which recommended a ring fence to save high street lenders from riskier investment banking operations.

Lawson also urged Osborne to toughen up liquidity ratios for banks and not to move away from inflation targeting. He added: “I don’t think the government needs to be frightened of the banks in the slightest. One does hear from time to time threats that they will up sticks but that's a load of nonsense.”

The former chancellor urged Mark Carney, the incoming Bank of England governor, to concentrate on sorting out the banking system.

“I’m sure Mark Carney is a very clever young man but I think that the government would be mad to move from inflation targeting to money GDP targeting,” Lawson said. Money GDP data was “not worth the paper it’s written on”.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.