The Government should recapitalise both Lloyds TSB and Edinburgh-based HBOS rather than risk the loss of 60,000 jobs through a merger, ministers were warned today.

The Government should recapitalise both Lloyds TSB and Edinburgh-based HBOS rather than risk the loss of 60,000 jobs through a merger, ministers were warned today.

SNP treasury spokesman Stuart Hosie said the takeover of HBOS by Lloyds TSB did not "make a great deal of sense" as unemployment figures increased.

At Commons questions on future business, Mr Hosie called for a debate in which the Government could try and justify why they were still supporting the "shotgun merger".

He said: "As we move into this recession, we've seen unemployment rise massively over the last three months and the forecasts for the future are pretty gloomy.

"Given it's our job, all of us, to try and protect and preserve the jobs, it doesn't appear to make a great deal of sense that the Government should be pressing ahead with their support of the Lloyds TSB/HBOS merger, which is reported today might lead to the loss of 60,000 jobs."

Mr Hosie said that "independent recapitalisation" of both banks would provide as much stability and preserve jobs.

Commons Leader Harriet Harman insisted that the merger was "the best course of action".

She said: "I really don't think it's right for any member to suggest there's some sort of magic wand alternative to the Lloyds TSB/HBOS proposal.

"If there was and it stood up to scrutiny, it would certainly be there for consideration. But we certainly regard this as the best option."

Ms Harman said the Government wanted to make sure that banks were lending to small businesses, families and the housing market.

But she acknowledged that the financial services were "very important employers" and ministers did not want to see job losses.

"That's why the Chancellor has made it clear that he will do whatever it takes to stabilise and protect all the existing financial services organisations," she said.