Election 2010: Banking levy polarises party leaders in final TV debate

Gordon Brown, David Cameron and Nick Clegg have lurched into different directions over the timetable and rate of a levy on Britain's banks.

In the last of three live Prime Ministerial debates ahead of the General Election on 6 May, this time on the economy, Lib Dem leader Clegg launched a scathing attack on "irresponsible" banks and repeated his calls for a 10% tax on their profits, effective immediately.

The Tory's Cameron agreed with Clegg on the timing of the tax, but, in a familiar move since announcing his support for a levy a month ago, shied away from putting a figure on the premium.

Brown was the most cautious on bank reform, arguing against the UK imposing a unilateral levy straight away, saying he wanted to wait for a global agreement to avoid engaging British banks in a " race to the bottom".

Labour would impose a levy "within a year" he said, and raised concerns banks would leave the country if Britain acted alone.

But Clegg came out swinging with his toughest stance yet against what he called the "irresponsible" banking sector.

He said the 10% levy was needed immediately to counter firms' current practice of offsetting taxes owed against losses suffered in a financial crisis they help cause, effectively paying no tax, he said.

"Casino" investment banks must be kept separate from "conservative, sober, retail banking", he said, telling millions of BBC viewers: "Never again can we let the banks hold a gun to the British economy."

He also called for an end to staff bonuses at loss making banks, no cash bonuses above £2,500 and the death of bonuses completely at directorial board level to stop banks engaging in risky short-termism.

The Lib Dem leader criticised Cameron and Brown as "too close to the City".

"They prefer that one Square Mile over the hundreds of thousands of square miles across Britain", he said.

In a quick-fire round of political point-scoring, Cameron passed the blame for the crisis first to Labour, the party which he said "gave Fred the Shred [Goodwin, former RBS chief executive] a knighthood for services to banking", and then to the FSA.

"Banks have been regulated by the wrong organisation. It is the Bank of England which should have the duty to call time on debt," he said.

In a final lurch towards positivity, Brown promised the UK will profit when it sells its shares in state-backed banks RBS and Lloyds, and said he is "optimistic" about the future of the economy.

But he repeated warnings that giving power to the Conservatives would "put the economy at immediate risk".

Elsewhere, getting banks lending again and in larger quantities to small and medium businesses and home-buyers was a "priority" for all three leaders.

Early estimates suggest around 10 million people will have watched the debate, filmed in front of a live tv audience, the last before Britain goes to the polls next Thursday.