Afternoon:
10°c
It is widely expected that the Bank of England will cut interest rates on Thursday — at a conservative estimate, by half a percentage point but possibly by a full point. It is equally widely expected that the rate increase will not be passed on in full by all banks and lending institutions.
Today, David Hodgkinson, chief operating officer at HSBC, said there would be some “stickiness” in mortgage rates, notwithstanding anything the Bank of England does. Which raises the question — just what is the Government getting from its unprecedented bail-out of the banks?
If taxpayers are effectively rescuing two of the four remaining high street banks — the exceptions being Barclays and HSBC — they should at least be entitled to ask that mortgage payers and credit-card debtors will see the full benefit of a Bank of England rate cut.
If the Government cannot secure even that then the bail-out has been remarkably one-sided in its benefits.
The beneficiaries of the rescue package include, of course, Lloyds TSB and HBOS, which between them are recapitalising to the tune of £17 billion, with £4 billion coming directly from government and the remainder sought from investors, with the state taking up any slack.
The merger between the two of them now looks inevitable. But the news that Lloyds TSB will have to write off a further £10 billion in HBOS's bad debts cannot make the prospect of a merger any more attractive to Lloyds TSB shareholders.
The reality is that this deal benefits the Government rather than Lloyds TSB shareholders; there is no real alternative. The only option other than a takeover is for the nationalisation of HBOS, a deal which would far eclipse Northern Rock and which would create havoc for the nation's finances. In the new financial order it is probably the best deal available. But if banks fail to pass on a rate cut, it can only add to public resentment of the bail-outs.
Safer stations
MINISTERS' decision to force rail operators to increase night-time staffing at railway stations is a victory for commuters and for this newspaper's campaign for safer stations. The terms are set out as part of the new South Central franchise, for trains from Surrey, Hampshire and Sussex. Every train will be equipped with CCTV, and 40 more London stations than at present will be staffed until the last night-time service. This is all very positive, as are plans to install 1,500 secure cycle parking spots on the network.
Unfortunately, the provision made for the rise in passenger numbers is still not adequate. The franchise terms will force operators to run more and longer trains, especially at busy times and at night and weekends. But that will not be enough to keep up with the increase in passenger numbers: the National Audit Office predicts that overcrowding will get worse. Meanwhile, fares continue to rise annually faster than inflation some by three per cent more than the Retail Prices Index. At a time when the Government has just committed to a hugely ambitious new carbon emissions reduction target, it makes no sense to price people off the railways. With this franchise, ministers seem readier to demand a better service from operators but it still isn't coming cheap.
And celebrating...
LEWIS HAMILTON. The end of the Formula One world championship could hardly have been more dramatic: Hamilton overtaking Toyota's Timo Glock in the last bend of the last lap of the last race, the Brazilian Grand Prix. Mr Hamilton's youth makes his win remarkable at 23, he is the youngest ever world champion and his dignity, restraint and extraordinary capacity for hard work make him an inspirational role model for other young men. We hope this will be the first of many Formula One triumphs.
Reader views (3)
I recenty got a finance deal for a VW golf at my local dealers, I put down a 10k payment upfront and asked for finance. Apparantly VW turned me down but RBS accepted me and I was told in the present market thats all I could get. When I turned up to sign the papers they gave me 31% APR on a 6500 loan over 18 months. Funny enough there were advertisements at 0% APR on brand new golfs.
Since RBS was bailed out by tax payers myself included can't I choose my APR and tell them to shove the 31% up their greedy backsides?. Also although looking back on it I was an idiot to agree to it if this was banks making lending easier by charging 31% then they can stuff it!!!!
- Dean, London, 04/11/2008 09:31
Report abuse
And so the addiction to debt continues...transferring the burden from the individual to the State will not effect a cure.
Meanwhile anyone who has saved for a 'rainy day', be it for a pension or even the young couple saving for their deposit on a property they can call 'home', will be penalised in a pathetic attempt to save the governments hide, and to bail out the greedy...
How innovative? the thickos of the left have now succeeded in nationalising our personal savings by literally hijacking what little savings we have, and not even allowing savers enoug interest to cover the cost of inflation - every pound saved now has a negative interest of at least 5%!
Just how stupid are these people who 'govern' us?
- Gil Harding, Ringwood. England..., 03/11/2008 20:20
Report abuse
"Borrowers need a real rate cut"
-Savers don't.
- Ellie, London, UK, 03/11/2008 18:06
Report abuse
