Brown defends handling of banking crisis

Gordon Brown hinted at further cuts in interest rates yesterday after announcing he had consulted world leaders, including the US President George Bush, over the global banking crisis.

In an attempt to steady nerves in his own party about Labour's slump in the polls he appeared with the Chancellor, Alistair Darling, at his last press conference before the Christmas break and insisted that he was on top of the crisis.

The Prime Minister said the Governor of the Bank of England, Mervyn King had assured him that the "fundamentals" in the British economy, including low inflation, remained sound.

"We stand able to weather the global financial storms and to respond where necessary, as the Bank of England has already done, with a cut in interest rates," he said.

Pressed over the 57bn rescue of Northern Rock, Mr Brown refused to give a guarantee that all the taxpayers' money would be returned, but he insisted that the taxpayers' loans were covered by the bank's assets.

He confirmed that nationalising the troubled bank was one of the options still under review.

The Prime Minister said he held talks yesterday on the state of the economy with the Chancellor, Mr King and the chairman of the Financial Services Authority, Sir Callum McCarthy, who has been criticised for not acting on Northern Rock more quickly.

Mr Brown said he had invited the German Chancellor Angela Merkel and French President Nicolas Sarkozy to London in the new year for talks on their joint proposals for reform of the financial institutions to create an "early warning" system for financial trouble.

"I have been talking about the global financial turbulence with Chancellor Merkel, President Sarkozy, the President of the European Commission [Jose Manuel Barroso] and I will talk later to President Bush," said Mr Brown.

In a message directed at his party after rumblings of discontent over the "data disaster", the proxy funding scandal, and wobbles over Northern Rock, he said: "We are not going to be diverted."

The Prime Minister warned his MPs: "Focus on the long-term challenges. Focus on what matters to the people of this country. Many of the things that have been written about recently will be forgotten. Many of the things that are important to the people of this country affordable housing, health, education, access to GPs, cleaner hospitals these are the issues we will concentrate on."

He has ordered cabinet ministers to raise their performance by returning in the new year with a range of initiatives to regain momentum. Mr Brown promised radical proposals to tackle binge drinking, a White Paper on constitutional reforms including plans for a largely elected House of Lords and a clean-up of the honours system.

The Chancellor said he would bring forward plans for reform of the banking system. "I will be announcing some wide-ranging reforms in January which I believe will improve the position, especially in relation to banks which might get into difficulty," said Mr Darling.

The Prime Minister brushed aside reported criticism of his leadership by Charles Clarke, the former Home Secretary, who accused him of failing to support his Cabinet ministers.

Mr Brown spoke to Mr Clarke yesterday about the interview which is understood to have taken place two months ago, and reassured him that Mr Clarke still had a front-line role to play with a possible return to Government in the new year.

"I think Charles Clarke has got a very important role to play in the future," said Mr Brown.

In the face of growing anger over police pay, Mr Brown said that the decision to stage pay awards in the public sector, including the police, had been pivotal in keeping inflation down to 2.1 per cent, almost at target, compared to four per cent in the US and three per cent in the Euro zone.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: PHP Developer - 3-4 Month Fixed Contract - £30-£35k pro rata

£30000 - £35000 per annum: Recruitment Genius: This is a 3-4 month pro rata fi...

Recruitment Genius: Telesales Executive - OTE £26,000+

£16000 - £26000 per annum: Recruitment Genius: A Telesales Executive is requir...

Recruitment Genius: Area Sales Manager

£25000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Recruitment Genius: Freight Forward Senior Operator

£22000 - £26000 per annum: Recruitment Genius: This logistics firm are looking...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map