Lord Myners described the £130bn sunk into banks as ‘nice little nest-egg’
Treasury minister Lord Myners faced anger and charges of ‘complacency’ by calling the Government’s multi-billion bank bailout a ‘nice little nest-egg’ for the taxpayer.
He also said he thought the worst of the financial sector crisis was over. (The worst is yet to come.)
There were immediate accusations that he was ‘glossing over’ the unprecedented risk to the public purse of saving the UK’s stricken financial houses.
The Government has pumped some £60billion into Royal Bank of Scotland, Lloyds TSB and HBOS through cash injections and by underwriting reckless loans.
Experts at the International Monetary Fund have predicted that the total bill will eventually reach a jaw- dropping £130billion. The rescue deal has helped swell national debt to record levels.
There has been outrage from ordinary families who will suffer for decades from soaring taxes and cuts to public services as governments grapple to get to grips with the financial disaster.
But Lord Myners insisted that the bailout was actually an ‘investment’ that would bear fruit. (Devaluation of the pound? The UK defaulting on its debt?)
He said he was ‘very confident’ the Government would end up making a profit on the spending, and that it would take ‘much less’ than a decade.
Speaking on Sky News’s Sunday Live programme, the minister said: ‘A lot of capital has been put into the banks but that is an investment and that investment will prove to be very productive in due course.
‘I am very confident that, over time, we will achieve a surplus on the investment we have made, and make a profit.
‘It is a nice little nest-egg for the British taxpayer.’
Questioned over how long it would take for the taxpayer to get back into the black, he replied: ‘We are already making a profit in respect of our investment in Royal Bank of Scotland, so we will see.
‘It will take time and we do not want to rush.’
But Lord Myners predicted it would be ‘much less’ than a decade.
Under the bailouts, the Royal Bank of Scotland received £20billion – meaning the taxpayer took 70 per cent of it – while the Lloyds Banking Group received a £17billion injection from the Government and is now 43 per cent owned by taxpayers.
On top of this, the Treasury had spent roughly £23billion as insurance to underwrite toxic debts and dubious loans.
In return for the investment, the Government has a say in how the banks are run, including controls over the bonuses paid to management.
Ministers have insisted the investments are assets and, ‘not just money being pumped in’.
The Government intends to sell its stake in the banks should they return to profit – pumping the money back into the national coffers. Declaring that the worst of the crisis was now over, Lord Myners insisted: ‘We have a stable banking system, our banks are well capitalised, they are supporting the economy.
‘As far as the economy is concerned, we continue to believe that towards the end of the year we will see that we’ve passed through the recession and economic growth is beginning to reappear.’
Shadow chief Treasury secretary Philip Hammond said last night: ‘Hopefully we are beginning to see the end of the recession, but nobody should imagine that we are out of the woods yet.
‘Lord Myners’s comments this morning smack of a dangerous-complacency creeping into Government thinking.
‘Clearly it suits Labour as we move towards the General Election to try to put the best possible gloss on the potential cost to the taxpayer of billions of pounds of taxpayers’ money spent saving the banks.’
But Liberal Democrat Treasury spokesman Vince Cable offered some support to Lord Myners, saying: ‘It was right to recapitalise the banks and if they are properly managed, then it could prove to be a lucrative measure.
‘But no sale should be rushed. The Government must do all it can to maximise the taxpayers’ return.’
By Ian Drury
Last updated at 7:57 AM on 14th September 2009
Source: Daily Mail