Why won’t the Tories say they favour the creation of a bad bank?

In his speech earlier today, George Osborne said:

‘we must deal with the toxic debts of the banks we now own. They will be zombies until we do. Neither dead nor fully alive.’

The clear implication of this statement, and several others that Conservative spokesmen have made in the last few months, is that a bad bank is needed. But the Tories always stop short of saying that they actually favour the creation of one. I can’t see any reason—political or economic—why the Tories shouldn’t say openly that a bad bank is a necessary step for ending this crisis. It seems to be another instance where the Tories would benefit from being less cautious.

The rest of Osborne’s speech was typically politically astute. He inveighed against the 50p rate, declaring it to mark the death of New Labour. But he chose to make clear that stopping the increase in National Insurance Contributions is the party’s top priority.