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Darling needs £50bn to cover rescued banks losses
Paul Waugh, Deputy Political Editor21 Apr 2009
MORE than £50 billion is expected to be set aside by the Chancellor to cover potential losses from the Government's banks bail-out, it emerged today.
The sum, the equivalent of an extra penny on income tax for 14 years, will fuel Tory claims that the Treasury's rescue package will cost the taxpayer dear over the long-term.
Whitehall sources confirmed today that there would be a “prudent provision” inserted into the public sector debt figures as part of the Treasury's cautious assumptions about future finances.
Until now, ministers and officials have sought to play down the likely cost of the banks rescue.
Around £50 billion is equivalent to the size of the NHS budget for seven months or more than a year of the defence budget.
Alistair Darling is also expected to declare that while he needs to set out a worst-case scenario, the state stands to make substantial profits when it sells its shares in RBS, Lloyds, Northern Rock, Dunfermline and Bradford & Bingley.
But Mr Darling has virtually ruled out selling off any of the Government's stakes in RBS and other banks before the general election, due next spring. The Treasury has a duty to get the best possible return for the taxpayer and will hold onto the banks and building society shares it owns until the economy recovers, sources said.
The Government has come under fire from the Conservatives for the “paper” losses it has already incurred in buying bank shares that have since collapsed in value. At yesterday's closing share price, the £20 billion Mr Darling has put into RBS had shrunk to £12.9 billion.
Ministers believe that they can emulate the Swedish government, which made healthy profits after its state rescue of banks in the early Nineties.
A total of £1.2 trillion in loans, capital injections and guarantees has been set out by the Treasury over the past 18 months as it battled to prevent Britain's banks from going into meltdown.
Reader views (5)
Looking past all our politicians, bankers, stock market brokers, and property speculators, with their educationally high standards of education; I am left wondering what happened to good old plain uneducated intelligence.
We seem to be surrounded with educated people; who lack even the basic intelligence of most junior secondary school children.
They at least know you can’t have your cake and eat it; it is one or the other.
All failures should go to the wall; then and only then, will things change, get rid of lame ducks and drains on the tax payers; this was the message Margaret Thatcher passed on years ago.
Leave all the markets; to market forces; if they do not recover; it will be because they are not really needed or wanted by the market itself etc.
To prop up lame ducks like some banks and businesses clearly are today; would be like propping up British coal mines and British car factories, in Thatcher’s time.
Let’s get back to honest basics here; and stop propping up all lame ducks, all around the nation; what was good for miners; is just as good for Bankers and Businesses; all should be treated equally from the tax payer’s point of view.
Politicians as well should only get the national average wage increases; not double and treble what the normal tax payers get etc.
Never forget this also; no Government has any money of its own; they only have our money; they are the real parasites living off the people; and not the other way around.
- Mickyinlondon, london, 21/04/2009 14:08
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Oh my Darling, Oh my Darling,
Oh my Darling Tax-me-tight!
Tax me please until I diet,
Until I am no more.
You are lost without me,
So is Gordon McRuin McFly!
He is lost, Oh so lost,
Tax me until I am no more.
Then tax me again, and again,
Oh my Darling Tax-me-tight!
- Uncle Vanya, East Angular Area UK, 21/04/2009 14:03
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The Chancellor does not have £50 billion to set aside, Reuben, he can only borrow yet again. At some point the credit sources will run out and we will all be up the creek. But the real pits is to be up the creek with Brown, Darling, Mandelson. Not so much three men in a boat as three prats in lead-weighted diving suits.
- James Elliott, Eastbourne UK, 21/04/2009 12:49
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Excellent - More of my money spent by Labour.
- Dave Davies, Basingstoke, 21/04/2009 10:59
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By all accounts, Darling is to set aside GBP50,000,000,000 to off-set the huge losses of taxpayer's cash in the bailed-out banks.
Perhaps someone can enlighten me on just one point: THE UK IS BANKRUPT. THE CHANCELLOR OF THE EXCHEQUER HAS NOT GOT A CLUE WHAT HE IS SUPPOSED TO BE DOING. WHERE IS THIS GBP50,000,000,000 COMING FROM? MP's EXPENSES?
I firmly believe that Joe Public is of the opinion this Labour Government are well and truly up-the-creek without a paddle.
With control freak Brown at the helm and the likes of Darling, Harman, Straw and MISS PIGGY SMIFF saying "Yes, Mr Brown, no, Mr Brown, anything you say, Mr Brown", is it any wonder the UK is now a Third World Police State gone mad?
- Reuben Camara, Morecambe UK, 21/04/2009 10:55
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