Leading article: The bright side of the banks

Share
Related Topics

Alistair Darling is not used to receiving so much good news. Hot on the heels of Thursday's surprisingly resilient government borrowing figures arrives the unexpected revelation from Lloyds Banking Group, in which the taxpayer owns a 41 per cent stake, that it now hopes to turn a profit this year.

Both pieces of news will give the Chancellor cheer as he prepares next Wednesday's Budget. But while the borrowing data may enable Mr Darling to offer up some additional sweeteners for swing voters, it is the changing outlook for the banking sector that has the most significance for the long-term health of UK public finances.

In last year's Budget, the Treasury forecast that the total long-term cost to taxpayers of the state's support for the financial sector during the credit crunch would be up to £50bn, getting on for 4 per cent of total GDP. Last summer, the ratings agency Fitch was forecasting £40bn, and by the autumn, once Lloyds had managed to avoid asking the taxpayer to insure some £300bn of toxic assets, as it had once been expected to, those predictions were being halved.

Even so, even the most optimistic of banking analysts were sceptical about Gordon Brown's assertion in November that the taxpayer would, in the end, make a profit on its support for the banks. Lloyds' announcement yesterday, however, is another small step towards exactly that outcome.

The key is that the bill for bad debts at Lloyds – and Royal Bank of Scotland, where the taxpayer owns 84 per cent of the shares – is not now going to be quite so high. At RBS, which did insure its toxic assets with the state, the bill for taxpayers should now be lower. And at both banks, the day at which we can begin selling our stakes back into the private sector at a profit should now arrive a little more quickly.

The way Messrs Brown and Darling intervened to prevent the total collapse of British banks was widely copied internationally, but neither has reaped much in the way of a domestic dividend from their bold actions. This Chancellor and Prime Minister may not be in office to enjoy the moment, but the prospects for taxpayers are much better.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Experienced Bookkeeper - German Speaking - Part Time

£23000 - £25000 per annum: Recruitment Genius: This firm of accountants based ...

Recruitment Genius: Operations Manager

£30000 - £38000 per annum: Recruitment Genius: They are a financial services c...

Ashdown Group: Field Service Engineer

£30000 - £32000 per annum + car allowance and on call: Ashdown Group: A succes...

Recruitment Genius: Sales & Marketing Co-Ordinator

£15000 - £17000 per annum: Recruitment Genius: Well established small company ...

Day In a Page

Read Next
A woman runs down the street  

Should wolf-whistling be reported to the Police? If you're Poppy Smart, then yes

Jane Merrick
 

Voices in Danger: How can we prevent journalists from being sexually assaulted in conflict zones?

Heather Blake
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk
Nepal earthquake: One man's desperate escape from Everest base camp after the disaster

Escape from Everest base camp

Nick Talbot was sitting in his tent when the tsunami of snow and rock hit. He was lucky to live, unlike his climbing partner just feet away...
Adopting high fibre diet could dramatically cut risk of bowel cancer, says study

What happened when 20 Americans swapped diets with 20 Africans?

Innovative study in the US produces remarkable results
Blake Lively and 'The Age of Adaline': Gossip Girl comes
of age

Gossip girl comes of age

Blake Lively is best known for playing an affluent teenager. Her role as a woman who is trapped forever at 29 is a greater challenge
Goat cuisine: Kid meat is coming to Ocado

Goat cuisine

It's loved by chefs, ethical, low in fat and delicious. So, will kid meat give lamb a run for its money?
14 best coat hooks

Hang on: 14 best coat hooks

Set the tone for the rest of your house with a stylish and functional coat rack in the hallway
Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?