We did not take taxpayer for a mug, Darling insists

The Chancellor of the Exchequer, the Governor of the Bank of England and the chief executive of the Fin-ancial Services Authority faced a barrage of hostile questioning from MPs yesterday.

Alistair Darling, Mervyn King and Adair Turner were forced to answer criticism of their performance sent to the House of Commons Treasury Select Committee by members of the public, some 5,000 in all.

As the Government announced a new vehicle to manage its stakes in some of Britain's leading banks, UK Financial Investments Limited or UKFI, Mr Darling was pressed on executive bonuses and said: "We don't actually expect many bonuses to be paid at all in the banking sector next year".

Mr Darling and Mr King rebutted allegations that the taxpayer had been taken for a "mug" or a "monkey" over the £500bn in various forms of state support for the banks. Mr King said that he expected the Government to receive "money down the road which will more than justify the initial sums put up." However, he warned the banks again that they "will need to regenerate new sources of funding. The level of savings will be there. Indeed, one would expect that, in the next year or two, the domestic economy will be saving more as a fraction of GDP than it has in recent years. So I've no doubt that the savings pool is there."

Mr Darling told MPs that the UKFI would be required to ensure that "these companies are managed in a commercial way and at arms length from the Government". Its overarching objective will be to "protect and create value" for the taxpayer. A senior Treasury official, John Kingman, will be chief executive, while Sir Philip Hampton, the chairman of J Sainsbury and a former finance director of Lloyds TSB, will chair the UKFI. Sir Philip's appointment will end speculation that he is set to become chairman of Royal Bank of Scotland. The UKFI will oversee the state's interests in Royal Bank of Scotland, HBOS Lloyds TSB, Northern Rock and Bradford & Bingley.

Responding to a large volume of queries about the fate of savers with Icelandic bank accounts held on the Isle of Man, Mr Darling said that he would have to "think long and hard" before offering them compensation, and that it was "something that we would not do lightly". He said he would look again at the tax-free and regulatory status of the Isle of Man, given the evident confusion about whether it is covered by the UK Financial Services Compensation Scheme.

Lord Turner also promised to examine the apparent leaks of information to the BBC's Business Editor, Robert Peston, during the credit crisis. Some MPs raised the way that Mr Peston was ahead of the official release of news with "inside information from the top". Lord Turner said "we are concerned" but that there was no sign of market abuse, though there had been an "imperfect broadcast" of information.

He said the leaks were "very serious", but that no leaks were being investigated by the FSA, given that there was no offence against law or regulation. However, he promised one MP that he was "troubled" by Mr Peston's status, though it was not an offence, and that he would "take what you've said and look at it further, but I think we have to stick to what is an offence under market rules – we are not a policeperson of leaks in general".

MPs' worries over the way the crisis has been handled were echoed in the House of Lords, where the Treasury minister Lord Myners agreed that there was a need for a public inquiry into the behaviour of banks.

The shadow Chancellor, George Osborne, said: "As Alistair Darling has been forced to admit, ministers must bear responsibility for the failures in the system of banking regulation. We need a public inquiry that covers the behaviour of everyone responsible: the bankers, the regulators and, of course, the ministers, past and present.

"Because so much public money has been spent rescuing the banks, any inquiry must interview witnesses in public and one of the central witnesses must be the man who was Chancellor of the Exchequer for 10 years and presided over the age of irresponsibility: Gordon Brown."

John Kingman Head of UKFI

Described as affable and highly intelligent, John Kingman was promoted to be the number two civil servant at the Treasury last October, at the age of 38. A rapid rise to theposition of Second Permanent Secretary and Managing Director, Public Services & Growth, HM Treasury, sounds impressive enough.

More importantly, he obviously has the confidence of the Prime Minister, earned during exposure to Mr Brown during the latter's decade as Chancellor and Mr Kingman's stint as his press officer, among other postings. Mr Kingman was placed in charge of the Treasury team dealing with Northern Rock, and was involved in the recent negotiations with the banks now being part-nationalised, so his new job is a natural, if giddying, progression.

He has had a little exposure to the fringes of the "real world", having been a journalist with the 'Financial Times' and worked in the chief executive's office at BP, but has never been involved in banking or fund management. Able as he is, though, the obvious query is how a figure who has enjoyed such closeness to ministers can fulfil the requirement that the Government's relationship with UKFI be truly "arm's length".

Start your day with The Independent, sign up for daily news emails
The two faces revealed by the ultraviolet light
newsScholars left shaken after shining ultraviolet light on 500-year-old Welsh manuscript
Rosamund Pike played Bond girld Miranda Frost, who died in Die Another Day (PA)
Arts and Entertainment
newsHow do you get your party leader to embrace a message and then stick to it? With people like this
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat