Gordon Brown has called on the world’s banks to be more responsible and adopt a ‘social contract’ to prevent future bailouts hitting the taxpayer.

Speaking at the G20 summit of financial ministers on Saturday, Brown said that there was currently an unfair distribution between ‘risks and rewards’ in global banking.

He criticised the financial sector, saying that its successes were "reaped by the few but the costs of its failure of are borne of us all."

The Prime Minister wants to create an emergency fund to aid struggling banks and prevent the taxpayer bearing the costs of future economic downturns.

Addressing the summit, in St Andrews, Scotland, Brown said: “I believe we should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society.

“This is a unique sector that, when it fails, imposes such a high cost to the wider economy and damage to society that government intervention becomes essential.

“So the taxpayer had no real choice but to step in to keep the system afloat.

“And it cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us."

“There must be a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards.”

Among the measures being proposed was the introduction of a levy on financial transaction, known as a ‘Tobin tax’ and the setting up a special resolution fund.

However Brown warned that "enormous and difficult practical and technical issues" were involved in implementing any global reforms to the banking system and that Britain could not act alone.

A dispute over whether to continue fiscal stimulus measures, introduced at the start of the economic downturn, is expected to dominate today’s summit.

Countries including the US, Germany and Japan are considering their ‘exit strategies’ from the trillion dollar investment package.

However Brown warned this would jeopardise global recovery and hit families and businesses still struggling with the recession.

He said: “While recent indications of economic expansion give cause for cautious optimism they are not a reason to end economic stimulus prematurely,”

“It would be dangerous to put recovery at risk by suddenly cutting off the funding and investment that is supporting families and businesses through the most challenging times in a generation.”

He said counties should co-ordinate their “exit strategies” together when the time came.

Explore UK News

• Crime News

• Education News

• Health News

• Scotland News

Times Recommends

• The playboy and the Tory party leader
• Bin Laden's family tree is impenetrable jungle
• Paul McCartney