Taxpayer bank bail-out has cost £850 billion
Taxpayer bank bail-out has cost £850 billion
Friday 4th December 2009
Taxpayer's money has been used to give £850 billion in bank bail-outs to protect the financial system, a report has said.The National Audit Office (NAO) has said the Treasury was "justified" in using the funds, adding that the total cost will "take some time to answer".
The NAO said the funds were necessary given the scale of the economic collapse if they weren't provided, saying that the Treasury met two of the government's principal objectives; protecting depositors' money in banks and maintaining the stability of the financial system.
"Total losses will depend on losses from the Asset Protection Scheme and the price at which the government sells its holdings in RBS and Lloyds", the report concluded.
The report said that while the amount dished out had been an "unprecedented level" the banking sector as a whole had benefited from the improved confidence. The report also said that the Treasury will spend £107 million on crisis advisors by April 2010.
Amyas Morse, head of the NAO, said: "It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse. The Treasury was justified in using taxpayers' money to safeguard savings and stabilise and restore confidence in the financial system.
"But the big question is what all of this will eventually cost the taxpayer. This will take time to answer. What we do know is that how the eventual sale of RBS and Lloyds is managed will be crucial to protecting the public interest.
"As the crisis begins to subside, lessons must start to be learned. The authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers."
In response to the report, Liberal Democrat treasury spokesperson Vince Cable said: "This report shows the sheer scale of the debt that banks owe, both directly and indirectly, to the taxpayer.
"Given this, it is astonishing that banks such as RBS are still failing to meet their lending agreements.
"These banks should understand that with the level of state support they have received, they must be run in the public interest."
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