How much? (From the archives)

The £500 billion package to underpin the high street banks could – if things go wrong – mean taxpayers spending an average £16,000 each on the bail-out. These are enormous sums and we must hope the plan works. The interest rate cut was co-ordinated with other governments and is also designed to give lending a boost.

Why does saving the banks matter? The fact is that credit makes the economy tick and without some bank lending jobs will be lost, wages not paid and the value of our country’s assets will diminish as investment dries up. In recent years credit has been handed out too easily, so building up the economy on a debt bubble. But the banks are not sure now what debts are good quality and likely to be repaid.

The sad truth of this episode is that it is the taxpayer, not the Government or those who made rash lending decisions, who is bailing out the banks. Conservatives are helping the Government to try to sort out the mess and supporting their measures in the national interest, but there are many questions to be answered in due course about how we ended up here.

Finally, and you may be getting a little tired of hearing this, but what about the “moral hazard” of bailing out the very people who helped orchestrate this disaster? There is a serious danger present in mitigating all risk, this bail-out threatens encouraging the very recklessness which got us in this trouble in the first place. The Government must ensure that is not the effect.

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