Darling plan for secret bank funds

Chancellor Alistair Darling is proposing to allow disclosure of emergency funding to be delayed where it may help prevent a Northern Rock-style retail run on a bank by panicked savers.

The Government has also suggested a "special resolution regime" to take control of a failed bank under the proposals, including part-nationalisation.

Mr Darling has launched a three-month consultation on the changes, which would see a radical reform of banking regulations.

Savers could get greater protection over their deposits in a potentially pre-funded deposit guarantee scheme, which could see banks having to cough up billions of pounds in upfront levies.

More freedom may also be given to the Treasury, Financial Services Authority (FSA) and the Bank of England to help prevent and address future bank failings. The "tripartite authorities" have been blasted by MPs over their handling of the Northern Rock crisis, which led to the first run on a UK bank in nearly 150 years.

A report from the Treasury Select Committee criticised the FSA for a "systematic failure of duty" over the beleaguered mortgage lender because it failed to spot its "reckless" business model.

Bank of England Governor Mervyn King - who has been reappointed for a second five-year term - also came under attack for failing to act when the credit crunch first began to bite in August.

The disclosure of Northern Rock's need to call on the Bank as lender of last resort was heavily scrutinised by the committee in sparking the devastating retail run. But the Chancellor's regulatory overhauls would see the Bank able to offer financial support with a "period of non-disclosure".

It is also proposed that the Bank would have a more formal role in maintaining financial stability, with a renewed focus on co-operating internationally with fellow central banks.