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Cost forecast for bank bailouts cut to £10bn

Chancellor Alistair Darling has revised his forecast of the losses from bailing out HBOS, Royal Bank of Scotland and Northern Rock from £50bn to £10bn.

Darling said in his pre-Budget report this week that he thinks all taxpayers’ money, including fees, will be paid back by the state-owned banks in the long term.

In the Budget earlier this year, Darling estimated a loss to the taxpayer of £50bn from the interventions in the financial sector which he said was down to the extreme uncertainty in the economy at the time.

But he said that these risks have now “significantly diminished” because of the succ- essful intervention of governments, meaning that he was revising his prediction of losses to £10bn.

Darling said: “Lloyds Banking Group, for example, has been able to raise capital from the markets and is not receiving Government support in the Asset Protection Scheme.

“We have also restructured Royal Bank of Scotland’s participation in this scheme, so that there are no expected losses for the taxpayer. Other banks are also in a much more stable situation. As a result of this, I can revise down my provision for any potential impact on the public finances from £50bn to around £10bn.

“But our objective remains to get all the taxpayers’ money back, on top of the fees charged for supporting banks through this crisis.”

Harvest Independent Financial Management IFA Julian Stevens says: “Why isn’t the Government insisting that every penny of profits be applied to clear these debts and how are these banks being allowed to pay a penny in bonuses to anyone?”

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