Financial Markets

I want to know why the Chancellor did not agree with himself a week ago. I welcome the statement that senior bank executives will not get cash bonuses. Last week, the Prime Minister dismissed that suggestion when it was made by the Leader of the Opposition, and he now appears to agree with it. May I press the Chancellor on the bonuses paid in stock that he talked about? I suspect that that will be an important matter of debate in the coming year. Given that two thirds of the bonuses paid to the RBS chief executive last year were in shares, not in cash, will that arrangement still be possible under the terms that the Chancellor has set out? As we said last week, the purpose of rescuing the banks is rescuing the economy. That means extending small business loans and getting families the remortgages they need, but it must not mean a return to irresponsible lending. The Chancellor did not say much in his statement about the lending conditions, but he said this morning that the banks have agreed to keep the availability of loans to homeowners and small businesses at 2007 levels. What exactly does he mean by ““availability”” in that context, given that the Royal Bank of Scotland issued a statement today saying that it was going to accelerate the de-leveraging? The Council of Mortgage Lenders has also said today that a return to 2007 levels would be neither ““prudent or desirable””. Finally, has the Chancellor had time to reflect on how a decade of Government economic policies has led us into this massive bail out? The Prime Minister said today that, in future,"““you have got to lay aside more for the possibility that there will be contraction.””" Is that another way of saying that he should have fixed the roof when the sun was shining? Is the Chancellor being straight with people about the potential risks to the public purse? He says that in effect he wants to suspend the borrowing rules and fiddle the figures so that these huge additional debts are not counted on the balance sheet. What sort of example does that set the rest of the economy? Will the Office for National Statistics agree with his decision not to count that as national debt? The chairman of the Financial Services Authority, Adair Turner, gave us his candid views on the lunchtime news today, saying that"““many lessons have to be learned over what has gone on in the last ten years…we probably allowed a boom to go on for too long.””" Britain knows exactly who is to blame for that. We will support today's actions because, faced with the collapse of the banking system, the Government had no other option. However, this is no moment of triumph for the Government, because the British people have now been landed with the bill for the boom that turned to bust.