Tonight:
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THE BUSINESS Secretary Lord Mandelson will today announce a scheme allowing the taxpayer to guarantee bank loans to businesses. Such is the present sense of crisis, demonstrated by figures showing economic confidence at a new low, that this proposal will probably fulfil its task of showing the Government can take decisive action. At a time when banks' reluctance to lend is causing business so much difficulty, there is a case for loan guarantees of this kind, in return for fees, to keep viable businesses going.
There are obvious dangers. Details are still unclear, but if lenders can lay off perhaps half the risk of not getting paid back onto the taxpayer, and the price of doing so is too low, they may give loans to the wrong businesses. And politically, this scheme will strike many people as yet more help for blameworthy banks whose previously excessive lending led to the credit crunch, and who were already supposed to be co-operating after their injections of taxpayers' equity.
Lord Mandelson will have to show that the scheme is about preserving businesses and protecting jobs rather than bailing out bankers afresh, months after the first round of support for them has yielded disappointing results.
Also, it is not clear that the £10 billion being offered to guarantee up to £20 billion of lending will be sufficient. Some may duplicate what is already offered under the Small Business Loan Guarantee Scheme and EU arrangements. The scheme is smaller in scope than the £50 billion national loan guarantee scheme already floated by the Conservatives yet is not claiming to be self-financing. And much of the shortfall in available credit is due to the withdrawal of foreign lenders from the UK market. If they have shut up shop, there is little even Lord Mandelson can do to order them back.
It is certainly true that if the Government had not borrowed so much in the good times, it would be in a stronger position to take action on a grand scale now. Ministers are also paying the political price for presiding over a banking market which relied heavily on overseas participants who have now left. But these plans should get at least some new loans in place, and that is now urgently needed.
East End campus
THE MAYOR, Boris Johnson, is proposing to create a new university on the Olympic site after the Games are over. This could be the right way to use a campus-like environment in a part of London which is a long way from the principal locations of the capital's top universities. Some of them, including University College London and King's College London, are expressing interest in the site and there could be a further link with Beijing University.
London student numbers have grown fast in recent years. Higher education has huge potential as a creator of jobs and foreign earnings as well as playing a key part in keeping the UK competitive. The new institution could not only offer top sports facilities, a sports academy and student accommodation in the athletes' flats but also copy the example of the independent school sector by using on-site accommodation to attract committed staff.
The presence of students and the spending they bring could help the vital task of regenerating east London in the longer term, for which the 2012 Games are a catalyst. This is a project which deserves very serious consideration from all those involved.
And celebrating...
BON VIVEURS. One-time debs' delight Sir Dai Llewellyn, who has died aged 62, never did anything remotely useful in his career. Defying every known rule of moderation, he simply lived life to the full - and that cheered up a lot of people.
