Interviewed on the Today programme George Osborne said that the Government had run out of options and has little choice but to underwrite the so-called toxic assets of the British banking sector.

Ahead of announcements from the Government expected later today, which will see further steps towards full-scale banking nationalisation, the Shadow Chancellor said that he didn’t like what was happening but he saw no alternative.

He criticised Labour for being "distracted" by the VAT cut when energies should have been focused on the real issues of the banking crisis and the continuation of the credit crunch.  He called for a full and independent audit of Britain’s banks so that taxpayers had a true understanding of the nature of banks’ liabilities.

John Redwood MP, writing on his blog, is far from convinced that Labour needs to act today in the way that it is.  He calls for a radical climming down of RBS; including the sale of its insurance and manufacturing divisions, a reversal of the "foolish acquisition" of ABN Amro, and the sale of the US Citizens Bank.  Mr Redwood concludes:

"There is no need to panic today. The falling share price does not undermine the bank. The depositors are not in a panic as they assume the government stands behind them and the bank has substantial liquid assets. What needs to happen is the production of some sensible figures on the current state of the loans, and some active management of the bank to cut our risks. We need to see a string of disposals of the non banking interests and the overseas banks. We need some serious cost cutting starting with the top executives pay. We need some intelligent new UK lending to re start the business."

> Andrew Lilico on CentreRight: "Why neither loans nor recapitalisation nor underwriting is going to correct matters."