Monthly Archives: September 2008

Brown offers too small a savings guarantee to protect British and Scottish banks

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Early on Tuesday 30th September, the Irish Government issued a two-year unlimited guarantee on deposits in six Irish banks and building societies. This came after shares in Irish banks dropped by 26% in a single day and the action was taken ‘to safeguard the Irish financial system’. The arrangement covers branch customers in Northern Ireland.

While other governments have, in different ways, followed the Irish lead, Gordon Brown has limited the protection he is prepared to offer to savers with British banks. The current limited guarantee of £35,000 will rise only to £50,000.

There are serious concerns in the financial world that this is not enough. The Financial Services Authority (FSA) is afraid that a limited rise in protection may only serve to increase the anxiety of savers that their deposits are at risk. An unlimited guarantee, as the Irish Government has given, obviously removes such fears.

The BBC’s respected Robert Peston has said that the Irish move, while protecting that country’s financial stability, has left the British – and Scottish – banks at a severe competitive disadvantage. This situation will not be redressed by Mr Brown’s limited response.

UK savers can take advantage of the protection now offered to deposits with Irish banks. The Allied Irish Bank, the Anglo Irish Bank and the Bank of Ireland all have branches in the UK and accounts can be opened or transferred there by British savers. The Irish Post Office is also run by the Bank of Ireland, opening it to British depositors. Irish building societies whose deposits are now also protected would probably require people to come in person to a branch in Ireland to open an account, but these would be accessible by this route to savers from the UK.

With only £50,000 now guaranteed by Gordon Brown for deposits in UK banks, Robert Peston’s concerns about the competitive risk to British banks have real substance. Moreover, the UK financial market might experience a renewed crisis if this were to cause a run on banks as savers rushed to transfer their money to the safety of irish banks.

The certain thing is that people have to protect themselves – unless, as in the Irish case, the system offers protection. We note that the BBC online news service this morning (1st October) is carrying an article on the safest places for your cash – and what is identified as the safest – the Irish banks and building societies.

Mr Brown was said last night to be preparing an emergency plan. It is not yet known just what provisions this plan will make but there is no doubt that the UK financial market would be much more stable if he got it right first time instead of having a series of small measures drawn from him.

The real reason for producing the plan now may relate as,o to a different – political – emergency. Any betting that the ‘plan’ is unveiled sometime this evening, when it just might take some airtime from David Cameron’s speech to the  Conservative Party Conference?

Lloyds’ shareholder response to steep drop in HBOS shares now seriously threatens take over

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Twelve days ago when the Lloyd’s TSB deal to take over HBOS was agreed, HBOS was valued at £9.8 billion. By close of business on Tuesday 30th September HBOS shares had fallen to a position valuing the company at £6.5 billion. As of last night, HBOS’s share price was 122.4p, while the per-share value of Lloyds TSB’s offer was 188p.

Lloyd’s shareholders, who will have the final say on the deal, are seriously concerned now that Lloyds is paying too much for HBOS. They point out that HOS is twice the size of Lloyds TSB and they appear tp be determined that the deal will not go ahead under its current terms.

While both banks are insisting publicly that the arrangement stands and procedures are ongoing, it is understood by senior figures in the financial world that backroom re-negotiations are already taking place.

The likelihood is that the taxpayer will be required to make up the shortfall between any new and the former valuation of HBOS – they call is ‘a sweetener from the taxpayer’.

The extent to which Gordon Brown has already committed the UK to unusally heavy borrowing (£90 billion) is causing worries about its long term impact on the UK economy. Such anxieties can only be aggravated by the inevitability of additional borrowing requirements following further unanticipated expenditure on ‘sweeteners from the taxpayer’.

‘Unlucky’ Brown sees gold value rise to unprecedented level

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As Chancellor – and to widespread shock, Gordon Brown sold off half of the UK’s gold reserves around the millennium, losing then £2 billion in the process. It’s a lot worse now. As any rookie knows, gold rises in value at times of financial instability and yesterday (30th September) saw the value of gold rise to unprecedented levels.

The charitable describe Brown as an ‘unlucky’ Chancellor. Others raise serious issues of judgement.

In April 2007 Brown faced questions in parliament after The Sunday Times revealed that he dismissed advice from the Bank of England before selling off more than half the country’s gold reserves at the bottom of the market.

Insiders involved in the decision broke ranks at the time, after 18-months where the Treasury blocked The Sunday Times’s attempts to make public the official advice given to the Chancellor before he sold the gold. They revealed that Bank of England officials had serious concerns over Brown’s determination to sell 400 tons of bullion in a series of auctions between 1999 and 2002. At that time the price of gold was at a 20-year low. Between that time and April 2007 when Brown was questioned in the Commons, the price had almost trebled, leaving his ill-considered action costing the taxpayer an estimated £2 billion then. The loss at today’s prices is eye-watering and profoundly damaging.

Salmond calls on Gordon Brown to guarantee savings fully, as in Ireland

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Following what he described as a ‘constructive’ meeting with UK Chancellor Alastair Darling, Scotland’s First Minister has called on Prime Minister Gordon Brown to issue an unlimited government guarantee on sterling bank deposits. This would echo the strong protective action taken by Ireland early on Tuesday after an unprecedented fall of 26% in Irish bank shares. The irish Government has guaranteed all deposits in six Irish banks and building societies for a period of two years. This protection is extended to customers at branches in Northern Ireland.

Mr Salmond told BBC Scotland that guaranteeing deposits would be a ‘very strong declaration of confidence’ in such uncertain times. The First Minister feels that measures ‘similar but not identical’ to the action taken in Ireland would have ‘the three benefits of instilling confidence, protecting depositors and preventing runs on individual banks’.

Argyll’s walkers welcome relaunch of The Great Outdoors

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The classic walkers monthly mag, The Great Outdoors (or TGO), is re-launched this week, with its November issue featuring new design, new features and new columnists – while keeping its old cover price of £3.40. It’s also launching a new interactive wing to its website this Thursday – 2nd October.

The new mag is doing more gear reviews; a column by Roddy Woomble, Idlewild’s frontman and a keen walker; advice from the instructors at Glenmore Lodge in the Cairngorms, Scotland’s National Outdoor Training Centre; debates on issues of concern to hillwalkers; tips on spotting wildlife; and monthly profiles of walking clubs and walkers’ pubs.

Absolutely fabulous – Joanna Lumley’s contribution helps Gurkhas win battle to stay in Britain

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Five former members of the legendary regiment of the Gurkhas and the widow of another Gurkha veteran have been to London’s High Court to challenge immigration rules denying an automatic right of entry to those who retired from the British Army before 1997.

Today they won that case, a test case potentially affecting another 2,000 former Gurkhas who retired before 1997.

Mr Justice Blake cited the ‘moral debt of honour’ owed to the Gurkhas by the British people, grateful for their long service, conspicuous acts of bravery and loyalty to the Crown.

Their lawyer, Martin Howe said: ‘This is a victory that restores honour and dignity to deserving soldiers who faithfully served in Her Majesty’s armed forces. It is a victory for common sense; a victory for fairness; and a victory for the British sense of what is right’.

The actress Joanna Lumley, whose father served with the Gurkhas, played a leading part in the victory, speaking powerfully in defence of their case. After the court victory she said the judgement ‘…gives our country the chance to right a great wrong and to wipe out a national shame that has stained us all’.

Lib Dem leader Nick Clegg, also at the High Court for the case, described it as ‘a wonderful vindication’ for those campaigning to recognise the rights of the Gurkhas – who have served in the British Army for 200 years with 200,000 fighting for Britain in the First and Second World Wars.

Mr Clegg said: ‘I’ve always felt that if someone is prepared to die for this country, then they should have the right to live in this country’.

London 2012 Olympics to have one medal made from Scottish Gold

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And there may now also be a medal of Scottish gold presented at Glasgow’s 2014 Commonwealth Games.

Volunteers are panning the waters of the River Helmsdale in the Strath of Kildonan in Sutherland, the site of a major gold rush in the 19th century. It will take six grammes of gold to make a medal and the panners already have five grammes. So they’re carrying on to see if they can get enough for two medals – one for each of these two major international sporting events.

The project is being led by the Timespan museum in Helmsdale. Organiser Nicola Smith says: ‘The idea has really got the imagination of locals. We have had young schoolchildren here hunting for gold, as well as local adults, with the oldest being 86.

‘It is fantastic. They are finding wee specks bit by bit and the amount is really mounting. It takes a lot of work to find six grammes’.

The project will be inviting tenders to make an Olympic medal (and a Commonwealth one too, perhaps) from the Helmsdale gold.

A spokesman for the Games organisers said there was a good chance the offer would be considered although it is too early for decisions to be made on suppliers of the medals.

Further fall in HBOS shares threatens terms of Lloyds TSB deal

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The sharp fall in the stock markets following the failure of the American Congress to sign off the bail-out deal agreed for Wall Street has contributed to a further fall in the share value of HBOS. There is concern that this may drive Lloyds to renegotiate its takeover deal for HBOS.  This whole matter is of great concern to Scotland and to Argyll. The only reassurance has come from the BBC’s Robert Peston, who has emerged as a highly authoritative figure behind the scenes in the series of banking collapses. Peston has said that he has been in touch with all parties involved in the Lloyds / HBOS arrangements and that they have told him that there is ‘absolutely no possibility’ of any re-negotiation.

Weight restriction raised on Mull road from Aros Bridge to Dervaig

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Argyll and Bute Council have just announced (10.00am, 30th September) the raising of the weight restriction on the inland road between Aros Bridge and Dervaig in the north west of Mull. This will be of great help to local farms and businesses affected by the current restriction of 13 tonnes. From the start of October this will be increased to 18 tonnes.

The problem is that part of this road is built on very soft peat and various areas have suffered damage throughout the summer. The Council started work to strengthen the road almost immediately and is pleased to announce that funding has now been allocated to strengthen the weakest sections of the road.

Mull Councillor, Councillor Mary-Jean Devon, in welcoming the change, notes that: ‘Although heavy articulated vehicles will still not be able to travel on it, it will be a huge benefit to local farms, businesses and homes which have been affected by the restriction. This is wonderful news and work is due to be completed by mid October’.

Helen Thompson comes second in Littlehampton Kite Surfing event

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This week’s news seems so far to be all connected with water. Argyll’s Helen Thompson from Tiree has come second at the British Kite Surfing Association competition at Littlehampton. Finishing on Sunday 28th September, the event was dogged by poor winds. This meant that, with neither the women’s nor the men’s pro events were completed.

The results had to be made on the basis of the two heats able to be run. Helen came second in the first heat and won the second heat. Unfortunately the first heat counted as the result, giving Helen second place in that round and second place overall in the championships. Hannah Whiteley now leads overall by 95 points. (Had both heats counted Helen would be leading overall now.) To win the championships, Helen needs to win at Brighton in October, the last event of the season. We’ll keep you posted.

In the meantime, you’ll find some great pics of the event at the Ex-Pix website which specialises in extreme sports and which has been helping to promote Helen. Her achievements on the national waves help to draw attention to the fantastic wind and wave resources of her home base at Argyll’s Isle of Tiree – aka The Sunshine Isle and home to the Tiree Wave Classic, the World Cup event running from 11th – 18th October.