British prime minister Gordon Brown came under fire today for his admission that, as Chancellor, he was not tough enough in regulating the financial sector.
In a TV interview to be broadcast this evening, the Labour leader cites the failure to impose tighter regulation in the years before the financial crash as one of his biggest mistakes.
But Liberal Democrat Treasury spokesman Vince Cable said it was "not enough" for Mr Brown to say sorry, and that any future government must have a plan to ensure that taxpayers are never again held to ransom by the banks.
And shadow chancellor George Osborne said Mr Brown had been slow to admit his mistakes and was now preparing to make another mistake by raising National Insurance, which he branded a "jobs tax that will kill the recovery".
The row came as Liberal Democrats launched their manifesto for the May 6th general election, which leader Nick Clegg said would provide voters with "an opportunity to shape the future of our country for the better".
With opinion polls suggesting that a hung parliament is a real possibility, Mr Clegg urged voters to end the two-party "Labservative stitch-up" which has dominated British politics since the end of the Second World War.
He unveiled a 109-page manifesto outlining policies to raise the income tax threshold to £10,000, cut class sizes in schools, introduce a fairer voting system and democratic Upper House for Westminster and break up the banks.
"We've had 65 years of Labour and the Conservatives: the same parties taking turns and making the same mistakes, letting you down," said Mr Clegg.
"They have taught people to expect little from politics, and get less. It is time for something different. It is time for something better."
Meanwhile, Labour launched an assault on Conservative promises to hand power to the
people by scaling back State intervention and giving individuals and communities more involvement in the delivery of public services like hospitals and schools.
Campaign chief Lord Mandelson said the election was shaping up as a choice between "Labour
empowerment and Conservative abandonment", with David Cameron's proposals leaving families to "fend for themselves".
He unveiled a Labour poster with a picture of the Tory leader's face alongside the warning: "If you're there for him, he won't be there for you."
Mr Brown's admission of errors in his handling of the banks in the run-up to the financial crisis came in an interview recorded yesterday for broadcast this evening on ITV's Tonight programme.
Asked what had been his biggest mistakes in office, the prime minister said: "In the 1990s, the banks. They all came to us and said 'Look, we don't want to be regulated, we want to be free of regulation'.
"All the complaints I was getting from people was 'Look, you're regulating them too much'. And, actually, the truth is that globally and nationally we should have been regulating them more.
"So I've learnt from that. So you don't listen to the industry when they say 'This is good for us'. You've got to talk about the whole public interest."
Speaking on a campaign visit to Leeds this morning, Mr Brown said: "I have been saying for years that the regulation of banking has got to be stronger. I have been saying since the crisis started that we didn't have enough global regulation.
"I was explaining yesterday that we had a huge amount of pressure from the City and other organisations that wanted more deregulation — including from the Conservative Party.
"We know now that there should be more regulation and there should be more regulation internationally, and that is why I am trying to get the global financial tax, global supervision and international agreement."
Mr Brown's recognition of his mistake comes a day ahead of the first televised leadership debate of the election campaign, when the prime minister is likely to come under intense pressure from Mr Cameron and Mr Clegg over his handling of the economy.
Shadow chief secretary to the Treasury Philip Hammond said it was an "extraordinary" admission for Mr Brown to make, after two years of insisting that the banking crisis was caused by global problems which did not originate in the UK.
"He has finally admitted that it was his regulatory system that he personally implemented in 1998 that caused excessive risk-taking and excessive lending in the UK and contributed to this problem," Mr Hammond told the BBC.
"This is a very significant moment on the eve of the leaders' debate.
"Let's not let him keep this failed regulatory system in place. Let's get a Conservative government that will change the banking regulatory system, put the Bank of England back in charge and make sure this never happens again."
Mr Cable said: "It's not enough just to hold your hands up and say sorry without having a plan
for making sure that the same thing doesn't happen again.
"Gordon Brown's admission that he was swayed by the pleas of the City shows the danger of Tory plans to base economic policy on the wishes of vested interests. The only people that we should be thinking about are the British people and what's best for them.
"The Liberal Democrats have clear plans to break up the banks so that the recklessness of some bankers can never again hold the taxpayer to ransom."
Schools Secretary Ed Balls, who served under Mr Brown in the Treasury, also accepted the shortcoming in their approach, but insisted that Tories were even more enthusiastic for "light-touch" regulation.
"I was continuously attacked by some figures in the City, but also the Conservative Party, who said we were being much too tough, much too hard, and we were going to stifle City innovation and creativity," said Mr Balls.
"We had to get the balance right. I don't think we got that balance fully right. We should, in retrospect, have been tougher on some of the investment banks who didn't really know the risks they were running."
PA