Tories and Lib Dems Clash Over Bank Reforms 
An argument about the pace of the implementation of new bank reforms, which are aimed at avoiding another taxpayers' bailout in a future financial crisis, has erupted between Conservative and Liberal Democrat ministers.

Business Secretary Vince Cable announced that the proposals, which will see banks forced to ring-fence their high street and riskier investment arms, should be immediately introduced.

Adopting the so-called “subsidiarised” model would mean in the event of a future crisis the authorities would be able to seize the retail arm of a troubled institution, protecting ordinary consumers’ accounts from losses run up by City bankers.

However, the time given to implement the measures has caused disruption amongst Westminster.

Prime Minister David Cameron and the Chancellor George Osborne are backing the banks’ demand to be given several years to slowly implement the reforms.

Angela Knight, Chief executive of British Bankers' Association, said: "We are in for a very difficult autumn. This is, therefore, the time to concentrate on economic recovery and paying back the Government and taxpayers. By all means think about new regulation but now is not the time to add that as an overlay with respect to costs, uncertainty or whether it is going to do anything beneficial anyway."

However, Nick Clegg is fully backing Mr Cable’s views that the measures should be immediately implemented.

In an interview in The Times, Mr Cable said: “It is disingenuous in the extreme to use the current context to argue against reform. Banks are in a way trying to create a panic around something which they know has got to happen.”

Andrew Cave, spokesman for the Federation of Small Businesses, agreed that reforms should be implemented sooner rather than later.

"We need reform of the banking structure now more than ever, and we have a window in time to achieve this... We absolutely need this to ensure that there are more routes to finance and that the competition drives down the cost of lending,” he said.

For more information, please visit

Bookmark and Share

[ add comment ] ( 2146 views )   |  permalink
British Banks Responsible for Third of Economic Slump 
Official figures from the Office for National Statistics (ONS) have revealed that UK banks are responsible for 35 percent of the national economic decline since September 2008.

Compared to September 2008, when the British banking industry began its economic decline, the UK economy is 2.8 percent smaller and 4 percent smaller than the economic peak in March 2008.

The analysis by ONS has shown that the contraction in banking activity is accounted for one percentage point of the 2.8 percent fall.

Banks are only accountable for 5.1 percent of the national output; however, they are to blame for 35 percent of the national decline, making the impact the banks have on the economy completely out of proportion.

The banking industry has contracted by 2.6 per cent this year – this follows a 5.1 percent fall in 2010 and 7 per cent decline in 2009.

Chancellor George Osborne said: "While our economy as a whole has grown by 2.5 percent, the financial sector has shrunk by 4 percent. Take the financial sector out of the equation, and economic growth in the rest of the economy during the recovery has actually been above its average rate of the last two decades."

Philip Shaw, economist at Investec, said that in reality the damage was larger because of the effects on households and small business from restricted finance.

"For whatever reason, you've also got tighter lending conditions for households and small business now... the lack of credit is acting as a drag on the economy,” he said.

In comparison to the drag UK banks has brought onto the economy, retail has continued to provide support although the sector has been hit by a lack of consumer confidence. The industry, which accounts for 5.2 percent of total national output, grew 1.4 percent in 2010 and so far this year is up by 0.2 percent.

For more information, please visit

Bookmark and Share

[ add comment ] ( 2210 views )   |  permalink
Private Investors Encouraged To Help Poor  
The Government has launched a new drive to help families who are blighted by poverty and crime with the launch of “social impact bonds”.

Government Ministers are encouraging private investors, philanthropists, charity group and other groups to donate money to the bonds, which will be used to help break the cycle of deprivation and would therefore not cost the taxpayer anymore money.

The taxpayer already foots a bill of £4bn a year for assisting 46,000 of the most deprived families in the UK.

Investors who support the bonds will get paid a return for any of the projects which are a success.

The scheme will be trialled in Hammersmith, Fullham and Westminster in London, and Birmingham and Leicestershire, with an aim to raise up to £40 million.

The scheme has been launched after Ministers became concerned that the current focus on treating the problems of individual cases creates a costly cycle of deprivation which can be impossible to break. Therefore, it is hoped that with the use of social impact bonds, several problems will be intensively tackled in a family setting.

Civil Society Minister Nick Hurd, said: "We must not be afraid to do things differently to end the pointless cycle of crime and deprivation which wrecks communities and drains state services.

"Social impact bonds could open serious resources to tackle social problems in new and innovative ways."

Mr Hurd went on: "We want to restore a stronger sense of responsibility across our society and to give people working on the front line the power and resource they need to do their jobs properly.

"Social impact bonds could be one of many Big Society innovations that will build the new partnerships between the state, communities, businesses and charities and focus resources where they are needed."

The trials are expected to be up and running next year.

For more information, please visit

Bookmark and Share

[ add comment ] ( 1352 views )   |  permalink
A Swiss Tax Deal 
A Government Minister has defended a deal with the Swiss authorities that will see UK tax evaders with hidden overseas accounts targeted. The deal will see the Treasury recoup more than £5bn in unpaid tax from Britons with Swiss banks accounts.

The deal was signed between the UK and Switzerland last night. The account holders’ identities will be kept secret but their money will be taxed for the first time, at up to 34 percent of the sum hidden.

Treasury Minister David Gauke has defended the move, calling the deal ‘historic’.

In 2013, the Swiss banks will hand over a one-off levy of more than £5bn to settle past tax liabilities of Britons with money hidden away in the country’s discreet banking system.

Switzerland will then impose a withholding tax of 48 per cent on income such as interest and 27 per cent on capital gains such as shares rising in value.

Dave Hartnett, the permanent secretary for tax at HMRC, signed the agreement in Zurich.

"The world has changed for tax evaders," he said. "A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion."

Chancellor George Osborne said: "We will be as tough on the richest who evade tax as those who cheat on benefits. The days when it was easy to stash the profits of tax evasion in Switzerland are over."
There will be much criticism over the ongoing anonymity that the deal allows.

David Gauke told the BBC: "There was no prospect of the Swiss abandoning bank secrecy altogether.

"There is no political appetite for doing that and we also have to remember with Switzerland, with something like that, you would actually need to have a referendum on it, so there was no prospect of that happening.”

For more information, please visit

Bookmark and Share

[ add comment ] ( 2582 views )   |  permalink
Business Investment to Hit Record Low 
Concerns are being raised over the Government’s economic growth strategy following Barclay Capital’s claims that business investment in the UK is heading for a record low.

Despite encouragement from the Government for corporate activity, Friday’s figures are expected to reveal that companies are not spending. It was hoped that by slashing employers’ National Insurance contributions and corporation tax, business owners would feel more comfortable to spend more.

Following a brief bounce back to growth following the fall from 13 percent to 10 percent of Gross Financial Expenditure during the recession, BarCap claim that spending is now virtually at its record lowest level and is therefore heading back down.

However, in contrast to these reports the Office for Budget Responsibility expects business investment to expand by 6.7 percent this year and contribute a third of total growth. Trade is expected to deliver the bulk of the rest.

In May, Deputy Prime Minister Nick Clegg called on businesses "to do your bit, too ... expand and invest" to secure the recovery.

Chris Leslie, Labour's Shadow Treasury Minister, said: "The Chancellor banked on business investment and exports to counter his cuts but his reckless plan isn't working.”

The Department for Business, Innovation and Skills said: "The Government has set out an ambitious path for growth ... creating the right conditions for businesses to start up, invest and grow."

David Kern, chief economist at the British Chambers of Commerce, explained that business will only start to see improvements to growth when confidence in both consumers and exports improve.

"Although business investment will eventually come back, in the short term there is no great argument as demand is going to be low," he said.

For more information, please visit

Bookmark and Share

[ add comment ] ( 206 views )   |  permalink

<<First <Back | 111 | 112 | 113 | 114 | 115 | 116 | 117 | 118 | 119 | 120 | Next> Last>>