Business Secretary Vince Cable has warned banks they could be heading for a "train crash" if they award large bonuses while small businesses struggle to access credit.

Cable also warned that politicians would go on the "war path" and said banks would be subjected to more financial penalties unless they increase levels of lending.

Data recently released by the Bank of England showed lending to businesses fell for a fifth consecutive month in July.

Mr Cable suggested that the government could take tougher steps - including an increase in the banking levy imposed on the larger banks in the budget, which is due to raise £8bn over the next five years.