Edward Leigh Demands Answers Over £61.6bn Secret Loans

Local Parliamentarian, Edward Leigh MP, Chairman of the Public Accounts Committee, has today written an angry letter to the Chancellor of the Exchequer, Alistair Darling MP, demanding to know why the £61.6bn loans to Halifax Bank of Scotland (HBOS) and Royal Bank of Scotland (RBS) have only just been made public.

Mr. Leigh has asked Alistair Darling to clarify if this is the case. His letter says:

"Thank you for your letter of 23 November informing me that the Treasury granted the Bank an indemnity in October 2008 against losses it might incur in providing emergency support to RBS and HBOS. I followed this up with you in the House today and I must say that I cannot regard your answer as a full and sufficient explanation. I shall therefore await your further advice before deciding how to properly discharge my responsibilities in this situation.

"While the Banking Act 2009 (which was not in any case in force at the time) allows Ministers to delay or dispense with the need to report to Parliament in relation to Treasury support for banks paid directly from the Consolidated Fund, in my view this does not override long established protocols governing contingent liabilities.

"Under established rules, which are codified in the Treasury’s own guidance for departments, "Managing Public Money", Parliament would expect to be notified at the time an indemnity is granted. In circumstances where the existence of an indemnity needs to be kept confidential, the rules specify that such notification should be made to the Chair of PAC and the Chair of the relevant Select Committee. In practice under these rules, I and former Chairs of my Committee have been notified of indemnities and other liabilities on a confidential basis and none of us have breached the trust placed in us.

"I am greatly disturbed that the decision was taken to by-pass the rules in this case and would appreciate a full explanation from you. The rules also require Ministers to notify Parliament formally when the need for confidentiality lifts and I would like to know whether in your view this was the earliest opportunity for these matters to be brought into the open or whether it had more to do with the timing of the NAO work on the banking support measures which I understand is to be published next week. I look forward to your early response."

The Bank of England governor has hinted that Gordon Brown's plans to reform UK banking through regulation alone may not be enough.

Mervyn King said it was a 'delusion' that tightening regulation could stop banks' most risky activities from failing and leading to huge losses.

In his starkest warning to date, the Governor said banks may have to separate their day-to-day business from more speculative practices if they are to get state aid.

Mr. King also predicted that the United Kingdom's economy would grow in the remaining two quarters of the year.

He did not commit himself to saying the economy had come out of recession between July and September. Initial data on the economy's performance during that period is expected on Friday.

The Governor added that while it should become easier for households and businesses to borrow money, everone should be under no illusion that the path to sustained recovery will be smooth an painless, citing high unemployment and lower industrial output.

"We shall all be paying for the impact of this crisis on the public finances for a generation."

In his speech to Scottish business organisations in Edinburgh, Mr. King hinted that G20 plans for tighter regulations may not be sufficient, because if banks knew they would be bailed out if they hit difficulties, they would continue to take risks.

"The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion,"

Banks have been criticised for making risky investments - which in previous years had brought hefty profits and large bonuses for their staff. However, when these investments went wrong, it contributed to the global economic crisis which saw several banks, including Royal Bank of Scotland and Lloyds, being part-nationalised.

Mr King suggested it was hard to see why taxpayer support could not be limited to retail banking.

"Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are."

Direct or guaranteed investment in banks from the government was close to one trillion pounds, Mr King said.

"The sheer scale of support to the banking sector is breathtaking.

"Never has so much money been owed by so few to so many. And, one might add, so far with little real reform."

"It is hard to see how the existence of institutions that are 'too important to fail' is consistent with their being in the private sector.

"Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don't, distorts the allocation of resources and management of risk."

Mr. King said that those banks which continued to get public money to prop them up and aid their recovery should not be encouraged to try and earn profits to get out of government support by resuming the very activities that got them into trouble in the first place.

Sarkozy Slams Brown's VAT Cut & Economic "Mistakes"

Nicolas Sarkozy has become the latest world leader to condemn Gordon Brown’s decision to reduce VAT in an attempt to tackle the recession. The French President said Brown’s VAT cut had “absolutely not worked” and stressed he would not repeat Britain’s economic “mistakes”.

M. Sarkozy joins a host of high-profile figures who have condemned Brown’s economic policy, including the Chief Economist of the IMF, the Finance Minister of Germany, the Prime Minister of Luxembourg, and the CEOs of Sainsbury’s and Marks and Spencers.

George Osborne, the Shadow Chancellor, stressed,

“We said at the time that Brown’s flagship VAT cut would only make things worse and would be an expensive failure. That view is now echoed not just by British retailers, but by foreign governments, including France, Germany and Holland.

“Gordon Brown claims to have saved the world. It would appear that world leaders increasingly disagree.”

Giles McNeill on the Start of Nettleham & Saxilby Division Campaign

Whilst for many the County Council and European Parliamentary Elections, to be held on Thursday 4th June, may seem a long way off; nothing of substance was ever achieved without hard work and to that end the Conservative’s campaign in Saxilby kicked off today with myself and Rupert Matthews, Conservative Prospective European Parliamentary Candidate for the East Midlands, out and about in Saxilby.

A good number of volunteers turned out to deliver leaflets to the majority of households in Saxilby, and for those of you who haven’t yet had a ‘Saxilby Matters’ it will be dropping on your doormat any day now.

Giles and Rupert inspect a 'Saxilby Matters' at the start of Milbeck Drive.

I was very pleased to have the opportunity to show Rupert around Saxilby. Rupert was curious about the Library and I was sorry to inform him that the hours had been reduced, but that, in my view, had Saxilby had a Conservative County Councillor – who would be listened to by the Council’s leadership – then the hours may not have been reduced.

It was really good weather to be out and about and meeting local people and chatting to them about the issues that affect them. Naturally the economy is at the top of everyone's minds and so I was please to outline what Conservative are doing at West Lindsey, County and National Level to help people.

After the morning session we went for a tour of a number of sites in the Nettleham & saxilby Division. We went to Odder, Burton Waters, Riseholme and to finally to Nettleham before heading into the City of Lincoln to meet with a local business owner who is having a particular problem with European Union regulation.

All in all a full day of activities and I am personally very grateful to Rupert for coming and visiting, campaigning and generally helping out for the day.

Lincolnshire’s pubs being ripped off in tax inspectors’ cover-up

Government hides admission that pubs are paying too much in rates

Local pubs in Lincolnshire are being denied business rate cuts by the Government, Giles McNeill, Prospective Conservative Candidate for Lincolnshire County Council in the Nettleham & Saxilby Division, warned today. Pub landords could be paying thousands of pounds over the odds in tax, but are being kept in the dark by Government tax inspectors who want to avoid paying out tax refunds.

This follows a revelation earlier this year that tax inspectors were hiding the fact that hundreds of thousands of homes could be paying too much council tax. The tax officials kept quiet about the information to save money and save face.

• Five pubs closing every day: The British Beer & Pub Association has estimated that pubs are now closing at the rate of 36 a week - five a day. They are paying a heavy price for smoking ban, fragile consumer confidence, ruthless competition from supermarkets and – not least – higher beer taxes imposed by Gordon Brown.

• Government guidance on taxing pubs: Parliamentary Questions have brought to light unpublished internal guidance by the Valuation Office Agency (an arm of HM Revenue & Customs) on how local firms should be charged business rates. It admits that they have been giving out the wrong advice to firms on the effect of the smoking ban. Until recently, tax inspectors refused to give any business rate reduction for the loss of custom due to the ban. Their latest guidance now admits – thanks to advice from top lawyers – that the smoking ban represents a ‘material change’. Pubs can use this to make a claim for a lower ‘rateable value’ and so cut their yearly rates bill. For example, a £5,000 reduction in rateable value would save publicans £2,300 a year in tax.

• Local firms kept in the dark: Pubs can only apply for this tax cut if they make an appeal and fill out complex paperwork. The Government has made no announcement about potential refunds to local pubs across England and Wales. The Government is happy to hike tax bills, but it will not tell people when their bills could fall. Business rates are the third biggest cost to local firms after rent and staff costs.

Giles said:

“Local pubs in the villages that comprise the Nettleham & Saxilby Division are a vital part of our social fabric and community life. Whilst big pub chains may be making money out of Labour’s new drinking laws, small everyday pubs are suffering from the combined onslaught of higher beer taxes, a weakening economy, supermarkets selling alcohol below cost price and the smoking ban.

“Whatever people’s views on the smoking ban, it has had a major impact on many pubs. The Government’s own tax inspectors have now admitted that pubs may be eligible for refunds on their business rates, but local pub owners are being intentionally kept in the dark about this U-turn. This is yet another tax cover-up from the same inspectors who have conspired to hide council tax errors.

“Ministers are only interested in changing the tax system when it raises extra money for Gordon Brown’s coffers. Thanks to Whitehall secrecy and this stealth pub tax, local firms are going to the wall and everyday pub-goers are being hit in the wallet.”

Worrying numbers of home owners in West Lindsey are facing debt problems

Effect of credit crunch and rising mortgage interest rates

Giles McNeill, Conservative Candidate for Nettleham Ward, today expressed his concern at new figures which warn that 5 million families across Britain could be at risk of defaulting on mortgage payments and losing their home.

The analysis, conducted by The Spectator magazine using data from credit agencies, shows that 6,378 households in Gainsborough Constituency have a ‘sub-prime loan exposure’, and may be now struggling with debt.

This comes as the latest official Government figures show that 19,015 homes across the Midlands were hit with repossession orders last year, with 447 orders being issued by Lincoln County Court. The Bank of England has also warned that banks and building societies are planning to cut back their lending further in coming months.

The crisis in the credit market is reducing the availability of cheap loans and mortgages, hitting people on the housing ladder and those not yet on it. This year, 1.4 million mortgages will come to the end of their fixed rate periods. As interest rates are higher now than they were two years ago, this could add £200 to the average monthly mortgage bill, placing yet more pressure on severely stretched family budgets.

Conservatives are calling on mortgage lenders to do more to help these families by:

· Contacting home owners 3-6 months before the end of their fixed rate mortgage period,

· Offering free financial advice, and

· Not imposing sudden hikes in repayments.

First time buyers are suffering from the credit crunch too, as mortgage lenders are demanding larger deposits. In response, Conservatives are calling for stamp duty to be abolished by the Government for first time buyers, for homes up to £250,000.

Giles McNeill said:

“This week has brought more worrying evidence that under Gordon Brown, our economy is built on debt. Labour’s record is one of economic incompetence.
“Thousands of families across West Lindsey are now exposed to the possibility of losing their home. With many households facing soaring bills as their fixed rates come to an end, mortgage lenders should do more to help home owners with the soaring cost of living and help reduce the hardship under Gordon Brown’s Government.”