Tonight:
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THE Monetary Policy Committee of the Bank of England has cut interest rates by half a per cent, down to an historic low of 1.5 per cent.
It is a decision that will result in real savings for many mortgage payers, though only some providers will pass on the new rate. But it may cause wider problems.
Certainly, rate cuts at the outset of the recession made sense. Meanwhile the Treasury is running out of ammunition to throw at the downturn — though, of course, it is the Bank which made the decision. We must hope that the MPC's move will help businesses but the benefits may turn out to be largely token.
What matters more is the willingness of banks to lend to credit-worthy businesses, and the cut will not affect that. Real-life interest rates reflect the rate at which banks lend to each other, which has already fallen in the past few days.
A reduction in the base rate may well, in fact, do little to boost consumer confidence: lenders including Halifax and HSBC are passing the cut on to tracker mortgage customers, but others including the Nationwide building society are not. Nor have previous cuts, so far, produced a reduction in the huge interest rates paid on credit cards. Such a cut would be more likely to boost consumption.
What is more, as Anthony Hilton points out in this paper today, a rock-bottom base rate may well adversely affect sterling, which has already fallen sharply against the euro. Each rate cut makes sterling a less attractive currency for foreign investors. We now need stability in the value of the pound.
The Prime Minister has already said that he is concerned about the welfare of people on fixed incomes, chiefly pensioners. Yet this cut in interest rates is likely to aggravate their problem: that the value of income on their savings has been drastically undermined. The new rate will bring some home-owners welcome relief. But the real economic problems are likely to remain largely unaffected.
Act on gang rape
MOST of the focus on London's gang culture is centred on boys, as perpetrators and victims. But as Camila Batmanghelidjh, founder of Kids Company, points out in this paper today, there are other victims: girls living in socially deprived estates, who suffer rape and terrifying sexual intimidation by the gangs.
Recently, the phenomenon came to public attention when the perpetrators of a particularly ugly gang-rape of a 14-year-old girl were sentenced: we learned that some of them were as young as 13.
Trouble is, these cases are clearly only a small proportion of the real problem, which is drastically under-reported because the gang-perpetrators threaten the victims and their families with violence if they go to the police.
Even so, there were 85 reported cases last year in London. This may require a drastic response, perhaps for the police to bring charges against the suspected rapists, as with domestic violence, without the victim bringing charges.
Acknowledging the scale of the problem is the first step. Next, the police must ensure that they have a visible presence on the estates. Sentencing must, despite the offenders' youth, reflect the seriousness of their crime. But as Miss Batmanghelidjh points out, many of them are boys who grew up in single-parent families, with the problems that this brings. This phenomenon needs to be taken seriously.
And celebrating...
LONDON'S RIVERS. Nearly 10 miles of London's smaller rivers, tributaries of the Thames, are to be restored to their natural state under a scheme from the London Rivers Action plan, a partnership between the Greater London Authority and environmental agencies.
It is good news all round: for creatures like water rats and voles, for human habitat threatened by flooding and for people who want to enjoy natural riparian life in London.
