Nationalised bank Bradford & Bingley should not have shed its mutual status and gone into the risky lending that brought its downfall, Vince Cable said during his visit to Bradford.

The Liberal Democrat treasury spokesman said mutual financial businesses were vital to Britain’s economic base and praised the likes of Bradford-based Yorkshire Building Society.

He said: “Bradford & Bingley was a fine example of a good solid building society which people voted to change because they thought they were going to make money.

“After the change it got into irresponsible lending which caused its downfall and had to be bailed out the taxpayer, which was a great pity. We should learn the lesson from that experience and encourage mutual organisations and value them.

“They play an important role in our economy and there are some good examples of successful mutual building societies such as Nationwide and the Yorkshire which people rely on and trust.”

Mr Cable said the Liberal Democrats would break up the banks into smaller units and separate the high street operations from the international trading divisions.

He was confident that the party could snatch the new Bradford East seat from Labour, saying he was “very optimistic” of winning there.