Gordon Brown said today that he would be speaking to banks to press them to pass on the latest interest rate cut to borrowers.

He told GMTV: "I think banks should really pass on the interest rate cut. We are talking to the banks. Remember last time there was a cut, we had to speak to them before it was passed on and we will be speaking to them again."

Only a handful of lenders have said they will pass on yesterday's 1% reduction in full.

Mr Brown added that it was important to tackle the problem of the high Libor rate - the rate banks charge when borrowing from each other.
He denied that savers were being left in the lurch by the drastic rate cut.

"What I would be worried about about most is if we had inflation going up and taking away the value of people's savings.
"The interest rate going down is necessary to get the economy moving again.
"If you are a saver the best protection you have is that inflation is kept low."

He said that the gloomy economic headlines would only improve, "when we have the level of international co-operation we need.
"This is a global problem and we need action from other countries as well and I will be pressing for that from Monday."

But last night a Cabinet minister admitted the Government could not force banks to pass on the rate cut.

Health Secretary Alan Johnson told BBC1's Question Time: "No, we can't force banks to pass it on. We do expect - and certainly that's the whole premise of the Bank of England's decision to bring interest rates down to 2% - that that will be passed on.
"Certainly, consumers will be looking very carefully as to who's passed it on and who hasn't."

The dramatic percentage point cut left the cost of borrowing at 2% - a level not seen since 1951 and equal to the all-time record low in the UK. The European Central Bank also cut the eurozone rate from 3.25% to 2.5%.

HSBC, Lloyds TSB, Barclays' lending arm the Woolwich, and Bristol & West all said they would be reducing their standard variable rate (SVR) by at least the full 1%, while other lenders continued to keep their rates under review.

Nationwide last night followed the lead of its rival Halifax and said it would pass on the rate cut to its tracker customers in full.
The building society's tracker deal contains a so-called collar, stating that once interest rates fall below 2.75% it no longer has to pass on the reduction to borrowers.

But the group said following the 1% fall in the Bank of England base rate it would be waiving the clause and passing on both yesterday's and future interest rate cuts in full.

The move comes after a similar decision by Britain's biggest mortgage lender Halifax earlier in the day not to invoke an option on its tracker mortgage under which it no longer has to pass on all or any reduction once the base rate falls below 3%.

The Halifax move followed speculation that City watchdog the Financial Services Authority could force the group to pass on the cut as borrowers had not been made aware of the clause when they took out their mortgage.

The FSA warned earlier in the week that such clauses would be unenforceable if they were not included in the Key Facts Illustration which is given to borrowers when they arrange a loan.
But this was not the case for Nationwide, which included the clause in the document.

The decision is likely to put pressure on the Skipton and Yorkshire Building Societies, the other large lenders which have collars of 3%, to also waive them.

Nationwide also announced that it was cutting its standard variable rate, which it calls the base mortgage rate, by 0.69% to 4%, and it pledged that all future interest rate cuts would be passed on to SVR customers in full.

It joins only a handful of other lenders who have so far announced plans to cut their SVR.
Lloyds TSB, which also lends under the Cheltenham & Gloucester brand, HSBC and its subsidiary first direct, and Bristol & West and Bank of Ireland, which are part of the same group, were all quick to announce a 1% cut.

They were joined later in the day by the Woolwich, which is reducing its standard variable rate (SVR) by 1.15%, after failing to pass on any of November's cut to borrowers.

But Halifax is passing on 0.25% of the 1% reduction to customers on its SVR mortgage.
The group justified its decision, saying it had passed on all previous cuts, and had to manage its business in a "sustainable and prudent fashion".

The majority of lenders are expected to follow Halifax's lead and not reduce their SVR by the full amount.

Three quarters of groups with an SVR failed to cut their rates by the full 1.5% following last month's cut, with some lenders not reducing their SVR at all.

If lenders pass on the rate cut in full, people with a £150,000 mortgage will save around £85 a month, while those with a £250,000 one will be £142 a month better off.

But while the rate cut is likely to be good news for some borrowers, it is bad news for savers, particularly retired people who rely on deposit returns for their income.

Adrian Coles, director-general of the Building Societies' Association, said savers would be disappointed about the cut.

"Building societies which pass on both this base rate reduction and the last could halve the interest which they pay to their investors in a very short period of time," he said.

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