To many this will seem like stating the obvious, but it seems that the safety of our banking systems, both at home and abroad, is worsening by the hour. Only yesterday morning I was discussing where to raise some commercial finance for a community project. An extremely well-informed friend suggested a bank to me – yet by yesterday afternoon that bank was the very last place you’d want to do business.
The Chancellor Alistair Darling has finally launched Labour’s rescue plan – a package of financial shore-up, share purchase and sureties totalling £500,000,000,000 – that’s five billion pounds, or as one commentator said tonight “a five with an entire football team of noughts behind it”.
Yet today we hear that the crisis has spread to the funds held by local government in various banking institutions around the world. Icelandic bank Landsbanki and its UK arm Heritable are now in default, leaving at least twenty councils across the UK out on a limb, some to the tune of millions.
That’s all public money – yours and mine, paid through our council tax and managed in line with this Government’s guidlines. Yet Chancellor Darling will give no guarantee of protecting these funds. Instead he sated today “My number one concern … is to make sure we protect individual savers.”
But Chancellor Darling, aren’t all those ‘individual savers’ also council tax payers? How can national government leave local government unprotected, with some councils possibly having to raise council tax or cut services to recoup their losses? Doubtless you’ll still be giving us less in Government finance settlement next year, and once again capping the increases in council tax.
Does seem a little illogical.