Labour’s victory bails out Brown

The question is whether the Glenrothes result can be projected onto a national canvas. That seems unlikely. The banking crisis hit Scotland hard, with its two major banks, for all their reputation for thrift and prudence, being bailed out by a Scottish Prime Minister and Chancellor after humiliating collapses. The entire economic case for Scottish independence looks very different after the implosion of the Icelandic financial system — the notion of the economic self-sufficiency of small nations is less sustainable now. The sheer volatility of the oil price has, too, undermined the case for independence shored up by oil revenues. The truth is that Scotland without England would have crashed in the face of international financial meltdown; inevitably this took some wind from the SNP's sails. Neither can the Tories take much comfort from the result — they lost their deposit.

But this victory cannot be translated into national terms or even projected onto a general election. It is highly unlikely that the Prime Minister would bring forward an election to ­capitalise on his management of the banking crisis; that would look like opportunism. And between now and the election, the afterglow of his — and his Chancellor's — intervention will have faded. It is likely by then to be politics as usual, with scrutiny back on Labour's past management of an over-indebted economy. What can be said is that, on the back of Glenrothes, the Prime Minister is safe in his job — for now.

Banks still win

The belated capitulation of the banks in passing on the latest interest rate cut will be greeted with relief by ministers. After a breakfast meeting with the Chancellor, Alistair Darling, today, the major high street lenders have agreed to pass on all or most of yesterday's shock 1.5 per cent rate cut. The Council of Mortgage Lenders has confirmed that its members will cut rates by up to 1.5 per cent over the next few weeks. With such commitments, ministers may find it easier to make political capital with hard-pressed homeowners from their handling of the crisis.

But some institutions have already withdrawn their tracker mortgages, which vary according to the base rate, for new borrowers. And close scrutiny of the small print on these mortgages reveals that if the base rates fall below two per cent, the banks will not have to pass on the savings — which means these mortgage payers would not gain from any further swingeing cuts that may be made in the base rate. In other words, when interest rates rise, the banks win. When they fall, the banks don't lose. The Bank of England has done its bit; the banks have dragged their feet over doing theirs. And they cannot take refuge in the interbank lending rate: today the three-month rate fell by more than one per cent. Several banks are in hock to the taxpayer: they should not need this kind of pressure to act accordingly.

And celebrating...

Remembrance. This Sunday is Remembrance Sunday; it is moving to see so many people proudly wearing poppies in tribute to the members of the armed services who fought on behalf of all. But the conflicts are still going on: our celebration of the brave dead should also include the living.