Chancellor moves bank lending goal posts

Creditworthiness is an interesting concept. When things go pear shaped a "viable" business may no longer be viable over a short period, until the market sorts itself out, and the business has re-structured.

In this condition the business needs short term (3 yr) finance to adjust and survive. But of course it's current profitability is poor, so the loan won't be granted...

Clever folks these bankers.

What nonsense, but bankers lie all the time. The pay structure for banks provide no incentive for long-term business investment, particularly for small business, the backbone of every economy. Because of the bonus system the incentives are for quick and high yield that can be associated with a bonus. Take the money back and buy out what private funds remain in one major bank and rename as a national bank that provides the services that the traditional bank once provided. People need and want a safe choice and one does not exist. The gamblers are still allowed to gamble the depositiors money away, the same instruments that caused the collapse are still in use today and the levels of fraud and corruption are uncovered as investigations into the collapse proceed, although very slowly. The banks pulled a fast one on the people (their government) and people do not want it to happen again.

How much of this "new lending" by these two banks is actually refinancing lending agreements already in place with one of the other Banks? It's all too easy for RBS or Lloyds to offer a tiny discount on borrowing to other lenders' customers to attract "new" business - therefore hitting their targets, strengthening them in comparison to their competitors, but not particularly helping out the economy as a whole...

This comment was removed because the moderators found it broke the house rules. Explain.

Cameron is right. We must get ride of this incompetent government to get our country back on it's feet.

"This issue of whether businesses borrow is not a trivial one.

If they were not to want the credit on offer at the end of a recession, it would almost certainly mean that the recovery would be insipid to the point of being barely noticeable."

Presumably that means borrowing here to create profits out of a chinese based operation? Unintended by politicians of course, but quite deliberate by businesses.

Or it could additionally be that businesses are not buying into the recovery idea. Which would be sensible if they sensed a period of deflation was on its way for the next 3 years or more. This is still put forward as being a distinct possibility.

"Now the excuse of the banks is that demand from creditworthy borrowers just wasn't there"


Oh you don't say - this is a recession / depression - that's what happens!!!!
Aggregate demand falls because the Private sector fails, the Public sector can replace it - but only for a short while.

Is this economic for idiots or something? I'm not criticising this story, but the idiocy of banks who complain about a lack of demand during a recession?????????

No wonder they think they are wealth creators! - next they will think they can fly and walk through walls.

...let me pop down the local infant school - I think they have a better idea of the Economy than the bankers - at least they know what aggregate demand is!!

Someone write this in big letters outside Lloyds and RBS head office please.

Yd = C + I + G + (X-M)

Is it just me or have things gone mental?

"So both RBS and Lloyds will claim they are doing their bit for Britain,"

Oh yes - they've certainly gone mental alright....

With all due respect, it's all good and well saying banks are not lending enough. But as they are lending OUR MONEY, do we really want them to lend money to businesses that are not going to be able to pay back the money.

I am more concerned about the impact of this budget on SMEs bearing in mind that I run a small business and credit has been very hard to come by from the leading high street banks. The budget suggests that £94bn will be made available for SME borrowing, £50bn from RBS and £44bn from LLoyds TSB, however they still have discretion as to who they choose to lend to based on their own assessment of SME creditworthiness. I dont really see any change in the lending criteria of these banks to SME's, the govt seems to be use short-term sound bites to window dress the real issues that is facing the economy ..esp SME's like me.
part of the budget announcement included the introduction of a national credit Adjudicator to oversee and investigate and adverse lending to SME's, I would be intereted in monitoring the number of SME's that benefit from this new service in the next few months...though I do not see this policy last beyond May the 6th 2010!!

Being involved in a couple of respectable, entrepreneurial businesses, I can tell you that talk to a bank manager about a business and their obsession is property - 'Do you own a house?', 'How much equity have you got?', etc. What they want is security on directors' homes. They are not genuinely interested in the business plans, contracts, patents, etc. Just 'can we have a claim on your house if this fails'.

Well, it is an obsession with property which got us into the mess and proved that property is not 'as safe as houses'. We need technology businesses that export, as ours do. In California technology businesses are supported. Over hear, Brin and Page would have been asked if they owned a house and refused a loan to start Google.

Oh, and the removal of stamp duty on property under £250K will only put money into the pocket of sellers - there will be a higher price for first time buyers. What would genuinely help first time buyers is the removal of the massive taxpayer subsidy of the banks and greedy, speculative amateur landlords/buy-to-letters: the base rate at 0.5%. This rate has penalised savers and the responsible, and enabled thousands of landlords to profit from their bubble speculation and keep house prices high and out of reach for ordinary families. If this money was redirected towards the recreation of a dynamic, non-financial services, non-quango, non-governmental sector of the economy the results would be dramatic and socially beneficial.

A small example: a friend was a City lawyer, arranging tax avoidance schemes for the mega rich at an investment bank that received billions in the bailout. She earned six figures, and, for ten years, bought a new property every year or so, using 0% credit cards to obtain the deposit. She now has an empire of properties which once would have been affordable by families. Despite secondary and university in the UK, she claims non-dom status, given that her father was born outside the UK and has arranged her affairs so that she pays no meaningful tax. She was so highly geared that she very nearly went bankrupt during the credit crunch, but was saved by Darling's low base rate on her tracker mortgages. The result: she survived and is now so rich that she has given up work and lives a life of non-productive leisure. There are many, many people like her.

Buy-to-let landlords pay a measly couple of percent on their mortgages, while decent businesses which do, or might do, something for the balance of payments disaster, are quoted in the teens. We should have let those landlords, HBOS, RBS, etc. go to the wall, punished irresponsible individuals and rewarded the thrifty and the enterprising. Yes, there would have been a couple of months of pandemonium but life would have gone on and the UK could have moved on. Instead, the same problem remains: an obsession with property.

How can moving 15000 civil servants produce a saving in the short term. This will increase spend short term as extra staff are required for training, office moves, paying for staff to move ect. Also what will happen to the office space do we have real wealth creaters waiting to move into and pay the exorbatent costs in WHITEHALL

We have announced increased personal allowances for older pensioners, which will mean that from April next year, no-one over 75 will pay any tax on the first £10,000 of income.

Surely the above extract from the Chancellors speach is a lie.Anyone withan income in excess of £29230 have personal allowance restricted to £6475

Robert,

This is all well and good but it means little to the small-medium sized companies of this country. What is important to them is that if they go to their bank for a small loan or extension on their over-draught, then they will get it. This means that the company can continue to invest; employ their staff and hopefully make a profit.

The alernative is more, and more small companies going bankrupt and the loss of more jobs.

What the country requires is the banks to stop looking at their own profit sheets and consider the effect they have on the overall recovery of the economy.

Is it time for nationalised banks that work for the good of the country?
Or shall we continue with the current system where the executives in London get paid, and the rest of the country can go to hell!

Just seems like more Labour class-envy mob rule politics. It was not the London investment banks that went bust. It was the Scottish and North England lending banks; Royal Bank of Scotland, Halifax Bank of Scotland (HBOS), Northern Rock and Bradford & Bingley.

All deep in Labour heartlands with Labour voters as depositors. Moreover, with the loan default rate higher in Scotland and the North. Had these people made their agreed repayments on their mortgages, credit cards, etc, would the lending banks have gone bust? Unlikely.

So it is Southern taxpayers that bail out the North, yet again.

As for extra taxes on the banks, "because (as an essential service) they were bailed out", can we expect extra taxes on employees of tube and rail companies that have also been "bailed out", because their managers and employees failed to run their companies well? Probably not.

And increase in House Stamp Duty? Designed to hit a family in a four bedroom house in London, but not in Leeds. Everything in the Budget to appeal to Northern "voters", not much for the Southern "taxpayers", except more tax.

Sally. SW London

The first thing you do when you think of either setting a target or agreeing to one, is working out whether it is achievable or just cloud-cuckoo land ...........
If the Government set a target without recognising that the market was going to be borrowing-averse *, and the banks agreed to it without understanding their own customers, then heaven help us all.
Maybe they are all incompetent.

* particularly with rip-off terms.

Regards,

My post at 4 was removed because it broke the house rules! All I said was the truth, that the real people in the real economy will not borrow at the rates and fees now being demanded. Whats wrong in that?

7. At 2:48pm on 24 Mar 2010, writingsonthewall wrote:
No wonder they think they are wealth creators! - next they will think they can fly and walk through walls.

And since so many seem to believe that they were doing God's work, can I watch yet another banker prove he doesn't like logic and can the wall be the outside wall from the top of a very high building. Please!

#12
Isn't that age discrimination which is illegal due to EU law?
If the only reason they don't pay the tax is their age then it's a legal requirement that I should also be able to have that tax free sum.

#10
I wholeheartedly agree, but nothing will be done because the number of highly mortgaged people > sensible people who saved

the majority rules, even if they are idiots

#10 norwici

Great post!

13. At 3:25pm on 24 Mar 2010, EuroSider wrote:
'Is it time for nationalised banks that work for the good of the country?'

Yes it is time, high time.

I'd keep them nationalised as well, and sell off their non-core investment banking activities.

And then I’d merge them into one large Sate Bank that simply dealt with conventional domestic and business banking activities.

And I wouldn’t abolish cheques.

And then I'd withdraw the state guarantee from other private banks, hopefully before someone assassinated me.

Am I the only one who sees the problem with the banks. The government needs to be out of them as soon as possible. Darling wants them to increase their lending - meaning they are harder to sell if that lending because a bit toxic propping up businesses not in good shape. If a business cant get a loan with say Barclays or HSBC, is this a business worth investing taxpayers money in. And if they dont meet targets what can the chancellor really do? If you threaten the executive bonus, as an executive I would threaten the chancellor with government interference in what would amount to illegal government subsidies - I am sure other member states would have much to say on the matter. And if dodgy loans are being offered in the UK whats to stop my dutch company from applying for equal status?

Why banks are afraid to lend.
The economic recovery is largely dependent on small businesses to expand, increase production and create jobs.
Where can small business owners go to get capital to expand?
To the banks, right?
Apparently wrong.
I believe that banks are afraid to lend not because they lack faith in small businesses, but because they don't know, cannot separate “toxic” debt from real debt and therefore do not know their true capital positions. They are afraid to be undercapitalized. So, until banks isolate and fully deal with “toxic debt” instead of burying it – somewhere – in the balance sheets, the tight credit position will persist.
As recently as February, 2010, Lloyds revealed pre-tax losses of £6.3B. It maintained that it had been saddled with billions of pounds of 'toxic' debt. The bank's impairment charges (which occur when a company has paid more for an asset than it is worth), shot up by more than £9B last year.
Lloyds has suffered because of risky lending of HBOS, which was largely responsible for the soaring bad debts. But the group today echoed comments from RBS in assuring that the worst of the impairments for toxic loans and struggling borrowers is behind it. Really?
The finance director would only go as far as saying that impairment charges will be reduced (he thinks) in 2010.
Lloyds has been trying, but at what cost - 11,500 jobs cut last 12 months. The signal: further job cuts as annual cost saving targets went to £2B by the end of 2011.
Bad debts, bad debts, bad debts - millstones for banks. Hasn't it occurred to financial folk that there is a disconnection between real supply and demand in corporate banking? Hasn't it occurred to financial folk that there is something wrong with the supply because we surely know the demand is there - Small businesses want to lend.
What's more the solution cannot be sanctions if banks fail to lend. That might just make things worse.
The solution has got to be:
What is the problem? Find the valid level of capitalization.
Fix the problem. Dump toxic stuff into seperate bad bank, or just plain write it of. Bad bank is better because a few of the debts might actally pay.
Supply is now secure to meet demand.

I wonder how many angry responses post 14 will get from irate Northerners and Scots?

Her argument is, of course, taking 2 and 2 to make at least 6.

HBOS & RBS both grew phenomenally not in domestic house lending but large scale commercial lending often in the construction and commercial property sectors. It was ABM Amro that tipped RBS over the edge not any domestic mortgages. Also HBOS seemed to lend money to anyone with or without a buisness plan if it related to commercial property.

Admittedly B&B and Northern Rock went way overboard buying in mortgages from all and sundry with little checks in the expectation that the domestic property markets in the UK and USA was a one way bet in an upwards direction. Years of creaming in the profits plus demands for ever higher profits and dividends for shareholders and bonuses for Directors pushed them on. In every industry there are a few brave, or stupid, companies that go to the wall by betting it all on red as it were.

As per the other comments she's all yours my Scottish and Northern friends.

All the talk of initiatives and incentives to lend is utter rubbish. As a small business director I wanted to do some borrowing at the beginning of the year. With work in place with solid contracts and good margins the banks still decided not to bother helping my business grow. Im not going to sink without the finance but I am wasting money everyday because of the lack of it.

Can they do more, yes, but they are too busy putting all our money into the same roundabout borrowing/lending circle that got us where we are now. Putting money back into their financial markets seems to be their solution rather than into the wider economy.

At this rate there will be no industry left except banking and then we will watch this happen all over again.

The banks will do what the hell they like , the weakness of the Government will be seen as legendary in this respect.

The stamp duty cut is laughable, its on its off its on its off....thats not the problem first time buyers have its getting the in some cases 20% down payment saved up while still being able to survive.

At times i wonder if it wouldn't be better to just give first time buyers the deposit at zero interest rather than relying on the banks to deliver.

Even inside the non-state owned banks, the shortage of wholesale money meant that the banks changed all the lending criteria for new and existing customers. Most of them also removed totally any element of manager's discretion and put all potential lending on a box ticking regime which enables or forces the manager to say, 'The system won't let me.' And that is that.

So the banks have imposed new systems.

They have effectively castrated their managers.

New, off site, off shore unidentifyable teams of people make the decisions and do not even bother to tell the customers.

On the other hand, from words said by other business people in the Eastern Region, word is that RBS have been helpful and lent to businesses that other banks have turned down, so it would be interesting to see the figures for Lloyds and RBS on a regional split basis to see if they are consistent in their lending.

Either way the quote you give of the potential threat to senior bankers' pay, seems to me to be potentially shooting the goose in the foot, and putting her off lay for golden eggs to pay the taxpayer back for the subsidy.

14. At 3:33pm on 24 Mar 2010, Sally Smith wrote:
'Everything in the Budget to appeal to Northern "voters", not much for the Southern "taxpayers", except more tax'

Never thought about like that.

What's in it for those in Lowestoft, that's what I want to know.

Lets take a look around at all the global economies and see which one has the best banking sector business model.The surprising thing is its not in the west were you have a multitude of banks, varyinglaws, and organisations that think short term,driven by bonuses and speculative greed, so they end up constantly messing with commodity prices.
Its China which has one state controlled bank which provides there businesses with stability.
They do not change things constantly by speculation, companies exporting product do not have to constantly watch commodity and exchange rates to make sure they are not running a loss.Says a lot for the west when the most successful ecomomy is a communist country, but they are doing something right thats for sure!
When the city stockbrokers and commodity brokers speculate they destroy jobs in the real world thats for sure!

Banks are rolling in cash from the bail outs, the longer they stall and hold on to it the better there company figures will look even in a slump!
Shareholders will see them declare profits because the taxpayers cash has suddenly made them profitable. The senior management team get a pat on the bank and get bonuses and the real world ecomony people in real jobs working in struggling businesses get hung out to dry!
What a system hmmm?
Nationalise the lot make them state controlled and lets get back to making money by business enterprise, eg designing & manufacturing great products!

Would someone like to tell me what legacy Darling intends to leave to the nation and the next government with Public sector net debt to reach 54% of gross domestic product this year, increasing to 75% in 2014/15.

That does not sound to clever to me?

Wibble wibble wibble - the insanity train arrives.

What's better than a bank too big to fail?

A BAD BANK TOO BIG TO FAIL!

https://news.bbc.co.uk/1/hi/business/8585571.stm

Excellent work minions - brilliant idea, now go and put the trasury coffers on the 3.30 at Ascot and we're done.

wibble wibble wibble - cuckoo, cuckoo

5. At 2:17pm on 24 Mar 2010, Putney wrote:

"Cameron is right. We must get ride of this incompetent government to get our country back on it's feet."

....and replacing it with another incompetent Government (but they are a different colour) - is going to sort that one right out.

wibble wibble wibble - here comes another chuff chuff loopy loo

10. norwici 'The result: she survived and is now so rich that she has given up work and lives a life of non-productive leisure. There are many, many people like her.'

Has she got any kids? If so, how many?

8. At 2:50pm on 24 Mar 2010, Objective_Reality wrote:

"With all due respect, it's all good and well saying banks are not lending enough. But as they are lending OUR MONEY, do we really want them to lend money to businesses that are not going to be able to pay back the money."

Oh the incredulity..- let me make this clear.

"Banks have always lent YOUR money, they strip it from you, lend it to others in order to strip some more from them - it's called Capital accumulation and the end result is you get less and less and they get bigger and bigger and eventually - too big to fail"

Anyone tells you differently is a complete liar - or a politican (in which case they're both)

Bankers and MP all useless they have brought this country to its knees.With an election coming up we have a chance to vote this lot of MPs out and with it all the corruption surrounding Westminster.Make sure you vote the more independent MPs we get into Parliament the better.If your local MP is involved with the expenses or trips abroad scandal vote against this MP.I would like all MP to write a report on why we should vote for them and how they justify there expenses and trips abroad.

17. At 3:55pm on 24 Mar 2010, copperDolomite wrote:

"And since so many seem to believe that they were doing God's work, can I watch yet another banker prove he doesn't like logic and can the wall be the outside wall from the top of a very high building. Please!"

Bankers no longer throw themselves off buildings I'm afraid - they only used to do that when they feared being punished - that fear died when they were bailed out by the 'pet Government' they own.

I hope you all watched More 4's TRUE STORIES: THE YES MEN FIX THE WORLD.

A very enlightening programme (for those still in denial)

Two imposters (who pulled off the Dow Chemicals interview the BBC fell for) set up a 'risk measurement model' to establish the 'human factor of risk'

Essentially this was a case of "Some people may die, but we will make a lot of money"

How amazing, so many big banks immediately interested - one even saying "you know a lot of people will die as a result of this - but we will make a lot of money so I guess it's acceptable"

No - I am not joking - and nor was he.

Remember this when you're next being schmoozed by your slippery bank staff trying to sell you some 'high risk investment products'.

I recommend you seeek this programme out and watch it with your eyes open.

For those already enlightened - you might find it depressing.

Today's Budget what has it done for me unemployed due to the company I worked for closing due to the credit crunch A BIG FAT NOTHING.
All MP should be made to live for one month on unemployment benefit of £64.30 that would give them all a fright and show them what the real world is all about.
MP live in a wee world of there own no idea about being unemployed and looking for work.

We are a small business whom RBS wanted our personal property as security contrary to the EFG rules.
12 months later we are still here, made a small profit last year, working hard to grow the business and employ people despite cash being in short supply.
One thing is for sure we won't be going near any banks for loans in the future. Our business is firmly with the bank of underneath the mattress.
Frankly I hope some of those overpaid and seriously overvalued bank executives get their comeuppance pay review time.

The lack of verbal determination by "Little Darlin" is only matched by his unwillingness to effect proper measures.
Neither bank is lending - hiding behind "viable". The CEO of RBS won't respond to letters asking if the imvisible gnomes of "Credit" are aware of the "instructions" re lending.The assumption is therefore that "Credit" has not been told.
The sanction - very simple - no bonuses until real lending achieves target AND dividends get paid to ALL investors.

#10 well said

I have a new business that i've been investing in. I did need to borrow a small amount but sourced it from a private individual rather than a bank. I made this choice because banks don't bring anything to the party and run at the first sign of national economic problems even when the business is doing fine. Whereas the private individual i sourced from has given me excellent advice and contacts, a great interest rate and no repayment date.

Larger firms don't seem to be investing to the same extent. I think this is because many have been accountant dominated and so lack vision at the top, while others are waiting for infrastructure to be put in place.

On a general budget note, I don't agree that the govt has a deficit problem. I think the problem is rules and regs that add huge costs to consumers and business' thereby reducing growth, increasing unemployment and lowering the tax take. I recently worked out the cost of planning on my home and found it was the last 18 yrs of mortgage re-payments. I worked out that the planning cost on the residential mortgages of Britain is at least £32 billion pa and probably much more. That's just crazy. If we don't sort out that and the other costs from rules and regs we are going to have problems paying off the national debt let alone growing our economy.

I guess the good side is that by rationalising planning we could release a 20 year long huge growth spurt in consumer demand at no cost. Business faces the same problems with planning with the same potential for cost savings. But does any party have the courage to take on the nimby's.

Then we have all the other regs from the distant past adding huge costs or even outlawing business' and models not even dreamed of when the original statutes came in to force. My favourite is classifying webpage listings of freelancers as employment business' and agencies thus pricing them out of existence. The hypocrisy is that the NHS is making use of this model when it sends all it's medical typing to freelancers in New Zealand and Canada. It's just anti-UK.

So Robert as the business correspondent why aren't you reporting on these issues and questioning ministers about them. Why haven't you costed planning law. I know you like to speak to CEOs of large companies, but it's the little guys who provide the work and wealth for most countries. You're still bank orientated. Get off that and speak to and of us. Address our issues so the nation can fly.

14. At 3:33pm on 24 Mar 2010, Sally Smith wrote:
And increase in House Stamp Duty? Designed to hit a family in a four bedroom house in London, but not in Leeds. Everything in the Budget to appeal to Northern "voters", not much for the Southern "taxpayers", except more tax.
.........
Sally. SW London

Aren't we all in this together? For over thirty years, we've had this problem of the south dumping on the north and then complaining dishonestly that those without work are bone idle when they were out of work as a matter of government policy.

Paying taxes gives you no right to vote in this country. Or would you like to offer the vote to anyone who comes here for visit and buys a pint?

My granny doesn't pay taxes, she is retired, and if it wasn't for her generation, us lot wouldn't even be here. As a non-tax payer do you really think her vote is worth less than a tax payer? Really? What would you tell to the mother who has a severely handicapped son in his 30s that she spends her every waking hour caring for? She can not leave him out on the street and go off to work in order to earn a wage to pay a tax that you seem to think is necessary if she is to play a part in our democracy. Since you give your name as Sally do you really think that a young mum with a new baby who is feeding her baby and not back at work earning an income and paying tax, do you think her vote should be ignored because she isn't paying tax?

Do you really think that a vote should be cast on purely the weight of your purse? Don't you think of your neighbours, your siblings, your parents, your community, your country and what would be best for all?

With four bedrooms we can presume you use them for kids. So sell your four-bedroomed house, buy bunk beds and stop having so many children; it isn't really good for the environment or your bank balance! Someone might be just as self-centred and suggest to you that expecting the childless of this country to give two hoots about your kids education is a bit selfish!

Give me strength!

10 An excellent post every word spot on.
Banks are obessed with property its a safe investment, easy to pull the plug on the borrower when they default and foreclose.
Read Dysons book on the time he went round all the UK banks to get cash to develop the hydrocyclone vacum. The struggle he had to get cash to bring that design from the drawing board to the market place.
How vested interest eg bag cleaner manufacturers tried to buy him out and shut him down again vested interest. Its a real insight into how the banks control everything.

22. At 4:13pm on 24 Mar 2010, BluesBerry

Nice analysis - and what are the consequences of Lloyds cutting of staff?

....more bad debts, more reposessions and further decline in lending.

Ex-Lloyds staff may not have a Lloyds mortgage, but they are bound to have one with some bank. If there was one bank then it would be easy to see how this spiral of decline works.

Fortunately for those who prop up the system - there is more than 1 bank meaning ordinary folk can't see the predicament we're really in.

Job losses at other banks are viewed in isolation - like it's their problem, and not one being caused by the entire industry folding in on itself.

Consider that banks only make money from lending (really) so for a bank not to lend they must be scared wootless. It's blocking your windpipe because you think the air is poisoned and will kill you anyway - one way or the other you are going to die.

22. BluesBerry wrote:

"Hasn't it occurred to financial folk that there is a disconnection between real supply and demand in corporate banking?"

It certainly has, but remember that the global banking system carries out daily 'transactions' in excess of ten times the total daily transactions of the 'real' productive global economy and is also 'supporting' potential CDS & CDO liabilities to the value of over twelve times the total value of the entire global GDP.

If I were a banker I'd actually be very afraid - and so should we - it IS going to collapse, but you can see why banks don't want to lend....

23. At 4:21pm on 24 Mar 2010, Ian_the_chopper wrote:

"I wonder how many angry responses post 14 will get from irate Northerners and Scots?"

Clearly Sally doesn't understand what GLOBALISATION is.

RBS is no more scottish than Sean Connery - sure he was born there, sure he talks about independence - but where does he live again? Some tax free haven somewhere?

I suspect Sally will be blaming those 'scottish and north eastern immigrants' for stealing her job next...

14. At 3:33pm on 24 Mar 2010, Sally Smith wrote:

"So it is Southern taxpayers that bail out the North, yet again."

...so when was the last time?

What you need to ask yourself Sally is "What does the south PRODUCE" - the last time I looked all they 'make' are services. Most real production (that's factories and stuff) happens in the North. So considering this is where the wealth emminates from, I guess it's actually Northerners bailing out Southeners.

Fortunately I am a southerner so I can say what I like - I even live in SW London, so I know the level of arrogance we're dealing with here.

Maybe Sally lost her job and is sad about it - typical southerners - don't know what it's like to lose a job!

14. Sally Smith 'All deep in Labour heartlands with Labour voters as depositors. Moreover, with the loan default rate higher in Scotland and the North. Had these people made their agreed repayments on their mortgages, credit cards, etc, would the lending banks have gone bust? Unlikely.'

Interesting. Do you have any figures to substantiate that assertion? Were Northerners the sub-primers?

They were encouraged to buy their own homes where they used to rent, to have bank accounts and credit cards where they used to be paid cash in hand weekly wages, go to 'university', buy on credit when it used to be a taboo (because they knew from bitter experience what the likely cost would be in the end). This was started by Thatcher's Josephian mob, and continued with Blair and friends.

An age old con based upon ignorance of the basics of human diversity - reinforced by political correctness so nobody dared speak out. End to deference and respect - equality for all......classic free market serving opportunism/anarchism.

27. At 4:37pm on 24 Mar 2010, Dempster wrote:

"What's in it for those in Lowestoft, that's what I want to know."

You live in Lowestoft? - I had to use Google maps to find it!

Do they collect taxes there? - surely the whole of Norfolk has opted out by now...

On the brightside - it looks like a 8 hour swim to Den Haag and the safety of Europe if things go sour.

What would happen if Fuel Duty were abolished entirely, to be replaced by the same VAT that applies to Fuel Oil?

As most, if not all, of our commodities are distributed by road would this not lead to a lowering of prices, more money in the pockets of everybody in the UK to be able to spend in the shops, thereby generating wealth, protecting jobs in most sectors and increasing tax revenue from Income Tax.

The loss in tax from Fuel Duty could be offset by placing the onus on vehicle manufacturers to produce greener engines, instead of the 'end user'- the road-going public being taxed to death.

23. At 4:21pm on 24 Mar 2010, Ian_the_chopper

Someone on this blog did suggest that putting barbed wire around the place would be a real start in sorting out this mess.

I'll not say any more other than that post should never have been allowed through by a moderator for the sheer stupidity never mind racism!

Its the get rich quick merchants that screwed up the global economy.
1)The buy to let pimps that buy all the houses up and force normal familes out of the market.Then go round auctions buying all the foreclosure properties and renting them back to the people thats just been foreclosed on!
2)The metals coomodity brokers in the city that drive up the copper price and drive a real business out of business becuase he made a loss then on a contract!
3)The insurance broker that sells you a particular policy because it gives him the best commission, then retires to the sun and your left holding the endowment or pension pup.
4) Smartphones that have loads of features on them that rack up large mega bills, they really are a license to print money!
5)Estate agents,Travel agents, Recruitment agents all pimping a very good living on sales but not really adding any value to anything.
6) See comment 10 becuase this sums up banks to a tee!
The sad fact is nobody wants to really work any more just come up with scams to make money.

What on earth does that mean? Well the implication is that the government would use its shareholdings in Lloyds and RBS to force pay cuts on the banks' senior executives.

Which sounds tough. Though I suspect some of you would have hoped that the pay threat was more explicit.

Cut their pay? Why not put them in jail for deliberately refusing to fix the mess they created and damaging the economy?

Bernad Maddoff Ponzi schemes pails into insignificance when you compare his scam to whats been going off here. The size and scale of the fiddles beggars beleif from :
1) Failed endowments, poor returns so everybody cashs them in!
2) Pumping up house prices to increase comissions paid to all along the house purchase chain eg estate agents, mortgage & insurance sale people.
3) Pushing credit cards and loans on people again commission driven.

Then when the consumer binge stopped employers dumped labour in there millions globally and thats were the real pain and hardship is now people and there families have been hung out to dry!
The only real sector of the economy that will score is the property pimps, they have cheap money and loads of houses going through auctions to pick up cheap. Says a lot really for a once proud and prosperous nation.

Wouldn,t it be an even better idea for the banks to provide a clause wherein should they attain or surpass their target,they could possibly increase the credit allocation,it takes money to make money,keeping an unnecessarily tight rein on lending can also be counterproductive to the whole reason for setting a plateau in the first place if it ends up being more stifling to business growth rather than encouraging it.https://www.yomi11.com/blog.htm the blog about anything and everything

31. writingsonthewall Now that had me laughing...Thanks!

Clever folk dont borrow from banks.
Why? Simple. They dont need to.

There is competition from various government backed funds as to who can give money away quickest.
Dont believe me?

We now live in la la land where venture capital companies give it away.
Very little or no questions asked.

There was a parliamentary Public Accounts Committee that reported last week. Its findings were not given much if any publicity.

No self respecting entrepreneur would borrow money. They would likely have to pay it back!

Check out:
https://www.publications.parliament.uk/pa/cm200910/cmselect/cmpubacc/271/27103.htm

First conclusion:
"Despite investing taxpayers’ money in venture capital funds for almost ten years, the Department failed to establish a basic set of economic and financial objectives vital for setting clear direction for this set of funds."

It just gets worse after that.
Everybody on the take. And why not? Its only taxpayers money!

Rearrange these words:-
stable bolted after shutting horse has door the the
That's the budget, that is.

23. Ian_the_chopper 'Her argument is, of course, taking 2 and 2 to make at least 6.'

Forget the argument, is there any evidence/data? Some tend to go 'lite' on evidence, but heavy on 'argument' - this is, today, an insufficiently remarked upon (and curbed) spatial vs verbal thing.

21. At 4:13pm on 24 Mar 2010, Andy Den Haag wrote:
Am I the only one who sees the problem with the banks. The government needs to be out of them as soon as possible. Darling wants them to increase their lending - meaning they are harder to sell if that lending because a bit toxic propping up businesses not in good shape. If a business cant get a loan with say Barclays or HSBC, is this a business worth investing taxpayers money in.
=========
Considering how often the word 'Global' appears in New Labour excuses you might expect them to know how so much of the US Toxic Mortgage Debt came about - Clinton legislating to force Mortgages to be given to bad risks. It would appear Darling is aiming to repeat the situation over here! Fortunately he only has about a month to try and implement this.

28. At 4:40pm on 24 Mar 2010, KeithRodgers wrote:
Lets take a look around at all the global economies and see which one has the best banking sector business model.The surprising thing is its not in the west were you have a multitude of banks, varyinglaws, and organisations that think short term,driven by bonuses and speculative greed, so they end up constantly messing with commodity prices.
Its China which has one state controlled bank which provides there businesses with stability.
They do not change things constantly by speculation, companies exporting product do not have to constantly watch commodity and exchange rates to make sure they are not running a loss.Says a lot for the west when the most successful ecomomy is a communist country, but they are doing something right thats for sure!
==============
AS I've said before, the West (US in particular) are in the Politics of Business but China is in the business of Politics. So basically China is leeching off the rest of the World because it doesn't play by the same rules. China is NOT into the Globalisation, at least in the sense that it controls the exchange rate of its currency, and holds it artificially low. We in the west are playing a different game, and there is no ref, so we get creamed. Go and check out the concerns in the US. We haven't won the cold war yet, not by a long chalk.

38. At 5:07pm on 24 Mar 2010, dow456 wrote:
Today's Budget what has it done for me unemployed due to the company I worked for closing due to the credit crunch A BIG FAT NOTHING.
All MP should be made to live for one month on unemployment benefit of £64.30 that would give them all a fright and show them what the real world is all about.
MP live in a wee world of there own no idea about being unemployed and looking for work.

==========
I believe the going rate for MPs is in the order of £3000.00 - £5000.00 per day. Vote against the sitting MP and lets kick them ALL out.

Thanks for all the supportive words regarding my post #10.

Just a quick follow-up to say that there is a very simple measure that could be taken by any government serious about taking speculators out of the residential property market (in addition, of course, to a sensible base rate). The measure is to stop allowing mortgage interest to be tax deductible for non-owner occupiers - i.e. landlords paying tax on the profit on the property before they pay the mortgage interest, rather than after the payment of interest as is the case at the moment (this is why many landlords have interest only mortgages which match the rental income - so they pay NO income tax).

Not only would such an approach level the playing field in the property market, since landlords would be forced to pay income tax before paying the mortgage interest just as owner-occupiers have to from their salaries, but also it would raise rather a lot of money to reduce the deficit.

#59 Statist

Plenty of evidence here.
From my post 57


https://www.publications.parliament.uk/pa/cm200910/cmselect/cmpubacc/271/27103.htm


Conclusion #6.
"There is a risk that the current pattern of investment, concentrated in London and the South East, reinforces inequalities between regional economies. The geographical distribution of investment activity for the national funds tends to coincide with where fund managers are located. Capital for Enterprise Limited should make fund managers aware of the Department's remit to reduce inequalities between regional economies to avoid the risk that promising businesses in the regions are overlooked. Capital for Enterprises Limited should also publish data on the regional distribution of funds and fund managers."

i own a small buisness and have been trying for a working capital loan for 7-8 months from the royal bank with no success.
I am applying for working capital to buy a new vehicle to expand my buisness and rent an office and employ a person to control all the bookings which come in via phone calls.
i think it's laughable that in one hand the chancellor says the banks have got x amount of money to lend to small buisnesses but the banks want help out.
what's going on. We part own the banks but they still want help.

What people now need to realise is how much damage has been done by this government over the past 13 years which has left us in the worst financial state that modern day UK has ever witnessed. Only with a change of government will we see a real change. Yes it won't happen over night and there will still be pain. But remember that pain will be caused by undoing the mess of the previous 13 years. Sometimes in order for things to improve they have to get worse first. From where I stand it does not look as if this Chancellor is running the country and its banks, its more like the banks are running this chancellor and our country. They all get rich whilst the rest of us struggle to pay bills. Please see the sense and do not be taken in by talk of damage done 25 years ago. Focus on the damage done over the past 13 years.

#14 Sally Smith - it seems appropriate that I comment - thank you Copper Dolomite for getting in first though!

I suspect Sally has never been north of the Watford Gap.

Sally just to let you know we're all quite nice up here and the air is much fresher and tax free - why don't you sell your 4 - bedroomed hovel in London for your £million++ and move up to the north if you feel so aggrieved - after all its a free world so you can certainly move within the UK. As you point out you should have a few bob left over to pay for school fees and the like - they have some quite good private schools up north and in Scotland too.

#66 No more roses on those sheep

You are standing?

Luxury. Get back on yer head.

63. At 7:05pm on 24 Mar 2010, norwici

Rents would go up and since we are short of housing where would you go if you had no other choice but to rent from a private landlord.

There is an area in Glasgow where the affordable private sector means renting a flat full of cockroaches and a toilet about 6 inches away fromt the cooker - we forgot why we got rid of slum landlords after the war! A lot of folk were horrified when they saw that in the local rag. I'm not: anyone who has rented flats in 'student land' has experienced all sorts of nightmares. I remember wondering why my mate had an old school gymn in her room of one particular flat until she moved it, lifted up the rug and let me see the massive hole in the floor right through to the room below!

The simple solution is just to take some builders off the dole and get them building council houses - that would give some of our school leavers some decent apprenticships too. That hasnt happened because politically, the politicians know there are too many 'Sallys' in this world IMHO.

If you want to rely on private housing then best get some laws that are with real jail terms as penalties rather than stupidly thinking a slap on the wrist will work or fiddling with taxes. Bankers or landlords - no difference in lack of effective regulation and punishment.

64. prudeboy - Thanks. Interesting report, innovative returns and handling fees.

Now The Department for Innovation and Skills is cutting its budget by £300,000,000 after having out 338,000,000 of taxpayers money (with one of the earlier, largest, Regional funds provided a minus 15% return). A real Wheeler and Dealer is that Mr Mandelson.

66. At 7:16pm on 24 Mar 2010, No more roses on those sheep

What? Was it Darling who destroyed our industrial base?
Do you really think that gibbering Osborne will stand up to the banks? I wouldn't let him drive a car or lick a lollipop; he seemed to wet his pants with sheer excitement when hero Dave took the wheel of a Sweedish bus in a carpark! And all there on youtube for all to see.

"Labour's budget" is merely a euphemism for embezzlement of public funds!

72. ANornIron '"Labour's budget" is merely a euphemism for embezzlement of public funds!'

NEW Labour's budget. There's nothing Labour about this lot. How they ever got away with the name change is the sad story of our age.

But then, the country's dumbed down so much that it's hopeless pointing such things out these days. Try to enlighten people and all one gets is narcissistic rage. That's an 'infantile/adolescent disorder' - a sign of national arrested development (dysgenesis). It happened in Germany too. :-(

71. At 7:55pm on 24 Mar 2010, copperDolomite wrote:

No it was not Darling, it was it predecessor and his boss at the time who allowed their rich friends from outside the EU to buy up all the profitable industrialised companies and then painlessly sack all the British workers and ship the jobs back to India and other countries where the wages were a fraction of that in the UK. Please note this current government has spent a huge amount of energy encouraging borrowing to spend as this has provided an artificial boost to the economy and made them look good. However it has now come back to bite them big time and now darling cannot sort out the banks as to quote a source I cannot remember "Nothing ever really happens without those at the top knowing about it". This credit crash has happened on this governments watch and is a direct result of the encouragement of people spending money they simply did not have to spend. In years gone by folks would have needed to save up for things but this government encouraged "have it now and pay for it on credit" However they did not tell those same people that you will not be able to afford to repay that credit should your income drop by 30%. I am not affected personally by this as I am quite old fashioned and believe in saving up for what you want even if that means waiting a year or so. I cannot say if Osborne will do a better job as I do not personally know the man and his credentials. What I do know however is the Tory's can certainly do no worse and I truly believe that they have changed under Mr Cameron and will put the great back into Great Britain again if only given a chance. I will not respond to any more comments as I am logging off now to get on with some work and not sit in front of this blog all night responding to other peoples viewpoints. Best wishes to you and I hope life treats you well after the next election.

I wonder if the Chancellor knows or cares that he has in effect made it not worthwhile for people to earn over a 100,000 pounds a year until you earn beyond 113,000 pounds per year. If my calculations are correct practically all the money earned between these 2 figures is taken in tax due to the new reduction of personal allowance, eg earnings = 110,000 pa ie 10,000 over the 100,000 threshold. The extra tax at 40% = 4,000 and the reduction of personal allowance = 5,000, the resultant difference in take home pay for the additional 10,000 gross over 100,000 is 1,000 reducing to almost 0 at 113,000 income. There is now no point in my working any overtime to increase my wages upto and above 100,000 pounds. I am sure a lot of people will not have much sympathy for a relatively high earner but I work hard for the money (offshore oil worker) and spend less than 6 months in UK away from my family to earn this money. On the up side I'll have more time to spend the money with my family!

So nothing has changed then!! The government is quietly dropping the 'given' that we were going to have to rebalance our economy into one not so dependant on high debt and consumer spending!! Can you believe it?!! Well no not really....Its back to the same old game but this time with you and me not only taking on the debt but underwriting it as well!!

75. At 8:30pm on 24 Mar 2010, bobmarley wrote:

A good post.

Sympathy....yes, I wouldn't fancy your job.

Spend more time with the family, take more holidays, what the hell, you only live once.

62. At 7:00pm on 24 Mar 2010, DevilsAdvocate wrote:
'I believe the going rate for MPs is in the order of £3000.00 - £5000.00 per day. Vote against the sitting MP and lets kick them ALL out'

When was the last time you hired one? I reckon you could probably get one for less than £2000.00 at the moment.

In any event I agree, kick 'em all out.

I think you should stand as a candidate, you'd get my vote.

49. At 5:41pm on 24 Mar 2010, writingsonthewall wrote:
27. At 4:37pm on 24 Mar 2010, Dempster wrote:

"What's in it for those in Lowestoft, that's what I want to know."

You live in Lowestoft? - I had to use Google maps to find it!



Well actually no, but I've always fancied going.

74. At 8:24pm on 24 Mar 2010, No more roses on those sheep

If I were to believe you then I'd still scratching my head trying to remember who it was that was based in No10 the day I got my reducndancy notice way back in 1982. And still trying to figure out who it was that closed down Ravenscraig and just about every other industry I can think of, whilst at the same time running adverts 'To tell Sid', selling off the family jewels, the national family jewels, and selling off the council houses. Are you really telling me that it was all done under this Labour governement? Really? My memory must be a bit of a shambles. Must be the mad cow disease dispersed around us all, eh, let me see, what was that party in power again.... lordy, lord, that was when I was attending lectures about those prion thingies at Uni and how they can't easily be destroyed and how they are nasty in the brain, whatever they are, now that couldn't have been before labour could it, no, I'm not that young am I?


Sorry duck, but industry was well and truly up the creek without a paddle long before we lost John Smith and had that Fetes boy running the show as a very poor replacement and long before Labour got into office. And not enough people in this country gave two hoots about industry in this country because far too many people had decided that the services sector and the financial sector was the route to national riches.

So Labour converted and gave them what they wanted!

You might want to watch a BBC documentary called Thatcher and the Scots. Clips of it are available on this website (https://bbc.kongjiang.org/www.bbc.co.uk/scotland/history/modern_scotland/ravenscraig_demolished/%29.

The documentary is Scots-centric, but I'm in no doubt that the same process was undertaken in every industrial area of the UK

The whole lot of it is available you tube - just search for Thatcher and the Scots

You can tell that the United Kingdom is really knackered when there is more attention paid to post #14 than my question at #30.

Someone please enlighten me and make me think that ALL our futures ARE more important than whether some thinks that the North begins at Watford Gap!

Having worked at the coal face of the recession over the past 18 months restructuring debt in distressed businesses, I am somewhat incredulous at the common held view that it is simply all the banks fault. What about those company directors who set/agreed to strategies and actions which led to cash shortfalls, business failure, too much debt, redundancies and billions of pounds worth of impairment? Most management teams I have encountered have been weak, inexperienced, motivated by personal interest above that of their company's (and therefore flying in the face of their fiduciary duties) and lacking in the appropriate skillset. When replaced, often following a sizeable payoff, it is always interesting to see how well their successors perform largely using the same product, 'toolbox' and infrastructure.

I agree the banks are at fault, but they are not alone, and there are many company directors out there who are simply not being honest with themselves when they complain about there being a lack of credit. The first principle of any credit decision is whether the business has a sufficient and capable management team. Unfortunately, in my experience, most were simply not able to make the grade.

Finally, many clamour for qualifications for bankers. What about qualifications for company directors?

To 80. At 9:44pm on 24 Mar 2010, copperDolomite

In my personal experience, which is limited of course, I witnessed industry decimated in the Northwest of England in the 1980’s.

Mining, engineering, manufacturing….. so much lost, jobs to, mine being one.

I remember watching Boys from the Black Stuff, Auf Weidersehen Pet.

We’ve never really recovered from it, that’s the sadness.

Easy to destroy heavy industry, but hellishly difficult to reinstate it.

The strange thing is, that the current Government, (which is a kindly word for what they really are), have done the same.

The working Joe and Jane no longer have a party to represent them, that's the odd part about all this.

This was a helpful update Robert so thank you for it. I now understand that this is yet another measure being spun by our incompetent government. Can they never bring themselves to tell the truth?

82. At 10:02pm on 24 Mar 2010, G-Bob wrote:
'Finally, many clamour for qualifications for bankers. What about qualifications for company directors?'

Qualifications.....mmm
Perhaps moral compass?

82. At 10:02pm on 24 Mar 2010, G-Bob

Yip. I think the complaints about bankers at least to a certain extent really means those with a similar attitude to them, those that believe they should take short-term decisions in order to keep the shareholders happy and making money.

I was paired up with one company director at a training day on management techniques. The exercise was a simple look at and identifying problem areas in a business. The top level data provided showed the accounts department were having the the highest level of customer complaints. So this incredibly well dressed woman immediately decided that the way to deal with it was to fire the accounts department staff for having so many complaints! She went ballistic when I pointed out that really, one would be wise to investigate why the accounts department were having problems and what kind of problems. And she ran an IT company employing over 50 people. She was so scary in her ineptitude it makes me shudder even now. I later heard her company had hounded out all the experienced and longest-serving staff who were raising issues about poor quality and costly mistakes. About six months after the last of the experienced staff had left they went down the drain in a real mess. Talking the talk and wearing the right lippy only gets you so far.

I agree with you entirely about qualifications for the top. Our union leaders were taught some very hard lessons, but in the process we've let amateurs run riot with managing businesses. It's time they were sorted out too, because I truly believe the poverty of management skills and the flourishing of fashionable management gurus is a real problem on a par with outrageous unions (I do think unions are a good thing and are needed as a stabilising influence as happens in Germany etc). Those with entrepreneurial skills are needed, but they must recognise they need high quality skills and a thorough understanding of management and their business if their businesses are to grow. They have a responsibility to those who work for them, who's ability to pay their bills depend on the top developing their expertise. When the top guys fail to develop, they and their dreadful decisions are a danger to the future of the employees and this country.


81. At 10:01pm on 24 Mar 2010, Menedemus

Less unemployment than there would have been is Ossie had been in charge and swinging his knife.
Less house repo's if Boy David were in No10 and shrugging his shoulder at the rising homelessness.
And from watching Ed Balls chummy in with Vince Cable today, I'd say he'll be the Labour Chancellor of a re-elected government who lost his job because it was handed over to a man from a smaller party in the interests of the country.

83. At 10:23pm on 24 Mar 2010, Dempster

And people wonder why we have no tradesmen we can afford when we need them, why the use of serious drugs like heroin shot up through the roof and why so many people have no idea what work is. We blame the people, but the ones at the bottom of the pile did not choose those deliberate political decisions.

I notice there will be increased moves, announced in this budget to crack down on benefit cheats, but I didn't hear much in the way of cracking down on the tax evasion steps that have been well-documented for years. A fair political party, the Labour party is not. Dempster, I do really fear the poorest turning to extreme political parties. Well, why shouldn't they? Who is rebuilding this country?

What I want to see is business leaders rolling up their sleeves and announcing that they are going to cut out the nonsense, stop whinging and pulling this country out of the mess. Who cares if a guy doesn't have the skills you need, just take him off the dole, give hima job and train him up properly instead of expecting some miracle worker doing it at a price to be paid for in taxes! They'd only complain about the increased taxes. Don't they understand that the guy on the dole is someone claiming dole and living down the road! Don't they realise that it really is their problem one way or another?

No business wants to pay taxes, so if they don't want to pay the governement to take care of the country and the people in it, are they willing to do it themselves?

From what I've heard and read, every single person rolled their sleeves up during the war. I doubt that would happen now; we'd be too busy with the shareholder demands to notice any invasion!

I'm so glad Alli didn't tell anyone about the one million pounds worth of pension that he owes me when I retire from teaching next year.

Luckily most public sector co-workers on my grade will only get 40K a year when they retire at 60.....which will be easy enough to finance through Endogenous Quantitative Structural Deficit Reform

75. At 8:30pm on 24 Mar 2010, bobmarley wrote:
I wonder if the Chancellor knows or cares that he has in effect made it not worthwhile for people to earn over a 100,000 pounds a year until you earn beyond 113,000 pounds per year. If my calculations are correct practically all the money earned between these 2 figures is taken in tax due to the new reduction of personal allowance, eg earnings = 110,000 pa ie 10,000 over the 100,000 threshold.

===============
Reminds me of the 1970's, I remember the boss at a factory I was working at over the summer begging the staff to do overtime as he needed an order out urgently, and they all kept saying no, as it isn't worth it, we'll pay all the overtime in tax. Suffice it to say the order was delivered, but the workers didn't 'officially' do the overtime, quite what happened I don't know, I was told, tongue in cheek possibly, that the company had agreed to fund a Christmas Party, but it was in Spain in August.

78. At 9:37pm on 24 Mar 2010, Dempster wrote:
62. At 7:00pm on 24 Mar 2010, DevilsAdvocate wrote:
'I believe the going rate for MPs is in the order of £3000.00 - £5000.00 per day. Vote against the sitting MP and lets kick them ALL out'

When was the last time you hired one? I reckon you could probably get one for less than £2000.00 at the moment.

In any event I agree, kick 'em all out.

I think you should stand as a candidate, you'd get my vote.

==========
Doubt I could stand it, I'd have difficulty being polite to the Berk shire MP who is the Speaker for a start. I think he is from Berk shire, he has all the characteristic of a Berk. Mind you on today's quick viewing of the house, they all seem to be Berk shire MPs.

Vote em all out - if nothing else it makes for excellent TV viewing on election night. I think the plan is to vote for whoever it was who came second last time, I know we'll still get conmen, but it will be different conmen AND they'll be looking over their shoulders a bit more often I hope.

I'd be curious to know exactly how many people/businesses have a decent credit rating these days?

Given the appalling number of people made redundant and who have lost their homes, unable to get a job and trying to get a business off the ground because they want to work, I suspect very few people are 'credit worthy' enough for banks to lend to.

what about SME's desperately trying to cope after banks summarily changed their credit terms/withdrew them completely? Have they got top notch credit ratings?

How on earth are these referrals to a 'credit ombudsman' supposed to work? The computer says no-how can anyone successfully appeal against a computer program? We are not even allowed to know the reasons for being turned down-instead we have to pay for our own credit history!

I can see every business refused credit making a complaint, the 'ombudsman' getting bogged down, and everyone being told the bank concerned with their complaint acted correctly. It will take so long to get nowhere that businesses will be dead and buried long before anyone writes to tell them their complaint hasn't been upheld.

Credit referencing agencies and computer programs need an urgent massive revamp - alternatively give lending mandates back to local bank managers. At least then you could have a conversation with someone who knows you and your business. Not some faceless idiot in a foreign country who can't even answer a direct question clearly at a sensible speed that you can understand.

Like that's going to happen! In the words of another poster:

Call an election!

85. At 10:36pm on 24 Mar 2010, Dempster wrote:
82. At 10:02pm on 24 Mar 2010, G-Bob wrote:
'Finally, many clamour for qualifications for bankers. What about qualifications for company directors?'

Qualifications.....mmm
Perhaps moral compass?

=========

Excellent, I bet the same people are calling for Nurses to have degrees, on the basis of recent experience, I'd prefer compassion.

83. At 10:23pm on 24 Mar 2010, Dempster wrote:
To 80. At 9:44pm on 24 Mar 2010, copperDolomite

In my personal experience, which is limited of course, I witnessed industry decimated in the Northwest of England in the 1980’s.

Mining, engineering, manufacturing….. so much lost, jobs to, mine being one.

I remember watching Boys from the Black Stuff
===========
I remember watching Boys from the Black Stuff too, and I was always amazed at the reaction, does anyone remember when they got kicked off the site when surfacing the Road, whether they were a bunch of cowboys who did a Foreigner with the bosses tarmac and even skimped on that or whether they were a bunch of Cowboys skimping for a Cowboy boss? Whatever it was, I wouldn't have wanted them surfacing my drive.

92. At 01:26am on 25 Mar 2010, DevilsAdvocate wrote:
Excellent, I bet the same people are calling for Nurses to have degrees, on the basis of recent experience, I'd prefer compassion.

Hmm. No, not quite. I was thinking more along the lines of, morals, ethics, understanding that we all live on a planet with finite resources, short-termism isn't quite good enough and here's why.... have you ever studied engineering, no? well the class is next door off you go... and stay away from the marketing spin masters that won't do at all! sort of qualifications.

And I'd prefer my nurses to not be degree educated either not unless they are the supreme ones looking after me in intensive care! Someone who can do the bandages, the plaster cast, the needles knows how to wash her hands, can love my granny, understands that homeopathy is just plain old HO and give me some sympathy or be firm when I squeal when needed is far more useful!

To 93. At 01:45am on 25 Mar 2010, DevilsAdvocate

The 'Boys from the Black Stuff' bit was reference to the mood at the time, not their ability with asphalt for God's sake.

I've just realised that the taxable allowance will remain untouched! Why on earth couldn't the man pinch Vince's policy of raising that to 10K to help out the bank trading room cleaners, and of course ensure those traders (who make all kinds of mess) cough up to pay for it?

Is he really that frightened of the traders? Has he really let them off the hook in more ways than one?

I hope his cleaners make sure they clean his office - and his shoes as he walks past, only after the mop and water in the pail are thoroughly filthy! Aye, our lab cleaners have their ways of ensuring they are treated appropriately!

If ever there was 'proof' that the banks simply do not want to lend, try this.

Having spent months trying to access the EFG for a business that has customers globally waiting for a product, successfully answering all the questions, and clearing all the hurdles, that the bank has arbitrarily stuck in the way, including as someone mentioned previously 'do you own a house', we have arrived at a point where we have two final hurdles placed in our way. Clear them and, so we're told, access to the EFG is ours.

'If you get your customers to pay in advance' & 'Can you provide any form of guarantee that your suppliers won't go bust'

The logic of the first simply defeats me. If we were able to get payment in advance why would we require finance?
The second, smacks of absolute desperation on the part of the banks to find some reason, any reason, to justify their position not to lend, and one that is, to all practical intents and purposes, absolutely insurmountable.

Oh, and creditworthiness & ability to repay? We passed those tests.

97. At 08:50am on 25 Mar 2010, verysceptical
Can you provide any form of guarantee that your suppliers won't go bust'

You might as well just ask them if they know of a shop (maybe they financed a shop in that line of business....) where you can go and rent a crystal ball! You never know, they might ask around the office if any one knows of such a shop nearby - well they are pushing the bounds of ridiculous now.

What about this for a scenario - I've heard it from several sources in the property industry.

Banks are under a certain certain amount of pressure not to repossess at the moment. Two reasons, it'll make an already bad situation worse by increasing their losses at a time when they can't afford it, but also because there is a general election coming up and loads of repos before an election looks bad.

Whatever the reason, the number of repossessed properties coming through to the auction market (traditionally the source of disposal for banks) has dried up dramatically at a time when you would expect it to rise.

Now consider this: the banks are under pressure to lend more and not to repossess. None of them want to lend more because they still don't know what's outstanding and likely to go bad. They want to prop themselves up first. None of them particularly want to repossess at the moment because that's just crystallising their losses.

So what if they could come up with a different strategy that fulfilled both aims?

What if the banks set up a property holding company and lent it large sums of money? That would effectively fulfill the aim of lending more. Problem 1 solved.

What if that money was then used to buy repossessed properties at full value from the bank (not market value), thereby allowing the bank to get the properties off their hands and repair their mortgage book at the same time without having to declare any more losses? Problem 2 solved.

The property company then, with the support of the bank, just has to keep afloat long enough to satisfy the regulators - and quite probably get 'bought' by the bank a year or two later in a move that will be hailed as a far-sighted foray into the property market etc etc etc

To 99. At 09:45am on 25 Mar 2010, Ed Dixon

Good post, oddly enough it happened in the 1990's.

However there is an inherently unfair part to this practice.

The bank creates money from nothing (fractional reserve banking).
The bank lends the newly created money to the prospective home owner to buy a house.

The home owner defaults, so the bank repossesses the house and holds it on its balance sheet as an asset (as opposed to the home owners promise to pay, the loan money being on the other side as a corresponding negative amount.

The bank then rents out the house to the home owner (now destitute) who is then funded by the tax payer by way of housing benefit.

The housing benefit paid to the home owner and then handed over to the bank, is an income (as opposed to the interest it woudl have received.

The income in rent (as opposed to interest) then allows the negative side of the balance sheet (the loan) to gradually be written off.

The bank ends up owning the house out right.
The taxpayer having funded it.