The Treasury's Asset Protection Scheme to protect over £280 billion of Royal Bank of Scotland's financial assets against losses has, so far, only been partially successful in encouraging lending to creditworthy borrowers on the scale originally envisaged. The Scheme, launched in early 2009, initially involved two banks. RBS eventually put £282 billion of assets into the Scheme, while Lloyds Banking Group paid £2.5 billion to exit the Scheme in November 2009 and instead raised additional capital from shareholders. The principal elements of the Scheme, particularly the first loss, were based on a robust assessment of incentives and on as complete information on the underlying assets as were available at the time. As part of the Scheme, Lloyds and RBS agreed lending targets. While both banks met targets for mortgage lending, there was a shortfall of £30 billion against targets for lending to business. Value for money in the longer term will depend heavily on incentives built into the Scheme to encourage good management of assets. Establishing a requirement for RBS to bear the first £60 billion of losses (a 'first loss') was crucial in providing the right incentive for the bank to manage its assets effectively. However, if the first loss is exceeded, RBS will have less financial incentive to avoid further losses although the bank considers it will still have a legal and moral obligation to manage the assets as best it can. The position of taxpayers would be particularly vulnerable if losses were to exceed about £73 billion
The Budget sets out the Government's plans for taxation, public spending and economic growth for the coming year. The Government reports that the economy is stable and resilient, and continuing to grow, and that its strict fiscal rules are being met. Measures include: further financial support for children to move 250,000 out of poverty; an additional one-off payment for over-80s and over-60s households alongside the Winter Fuel Payment; increased support and access to finance for small firms; a £200 million package to support and bring forward by one year the GCSE targets; postponement of the planned fuel duty increase of 2 pence per litre in April 2008 until October 2008; an increase in alcohol duty rates by 6 per cent from 17 March 2008; laying the ground work for the introduction for five-year carbon budgets (the first of which will be included in Budget 2009); further steps to tackle climate change, including reforms to Vehicle Excise Duty, auctioning of 100 per cent of allowances for large electricity producers in Phase III of the EU Emissions Trading Scheme, and that to eliminate single use carrier bags the Government will legislate and impose a charge if retailers do not take voluntary action; further reforms to modernise the tax system, and a number of measures to combat tax fraud and avoidance. (Supporting publications issued alongside the Budget are "The UK economy: analysis of long-term performance and strategic challenges" and "2008 long-term public finance report", HM Treasury - http://www.hm-treasury.gov.uk/budget/budget_08/bud_bud08_index.cfm). The National Audit Office "Audit of assumptions Budget 2008" is also available (HC 345, ISBN 9780102953367).
Dated October 2007. The publication is effective from October 2007, when it replaces "Government accounting". Annexes to this document may be viewed at www.hm-treasury.gov.uk
The Government's first sale of shares in Lloyds Banking Group in September 2013 was managed effectively and provided value for money. United Kingdom Financial Investments (UKFI) thoroughly reviewed available options for a sale. It chose a process that maintained flexibility and allowed the sale to take place quickly, once a decision to sell had been taken. Taking account of market conditions and the fact that this was the first of a series of sales, UKFI decided to minimise risk by selling the shares only to institutional investors. Ahead of the sale, UKFI commissioned an extensive analysis of the value of the shares and priced the sale at 75p a share, a 3 per cent discount to the closing market price of just over 77p ahead of the offer. Demand in the sale from institutional investors exceeded the number of shares on offer by some 2.8 times. However, over three-quarters of this demand came from institutions seen as shorter-term investors. If these investors sold their shares soon after the sale, there was risk of a weak aftermarket and negative perceptions affecting future sales. Following the sale, the market price of the shares has held steady. Taking account of the cost of borrowing the money to buy the shares, there was a shortfall for the taxpayer of at least £230 million. This shortfall should be seen as part of the cost of securing the benefits of financial stability during the financial crisis, rather than any reflection on the sale process.
This report by the National Audit Office, made under sections 156 and 157 of the Finance Act 1998, examines the conventions and assumptions underlying the Treasury's fiscal projections within the 2006 Budget (HCP 968, session 2005-06; ISBN 0102937311).
This report examines the progress on repaying taxpayer support and maintenance of financial stability following action taken in the 2007 crisis in the financial markets. Action included nationalisation, the purchase of a large number of shares in RBS and Lloyds, establishing sector-wide schemes to guarantee banks' debt-funding and protect their assets, and indemnifying the Bank of England against losses for providing temporary liquidity. The level of explicit support has gone down from nearly £1 trillion to £512 billion, and estimates of the size of the implicit subsidy vary - from as high as £100 billion to just below £10 billion in 2009 alone. The explicit subsidy includes the fees paid by banks for their use of the Credit Guarantee Scheme which, to date, have been at least £1 billion less than the benefit received by the banks. These subsidies enable private gains to be made at the expense of public risk, and some of these gains have been used to pay bonuses to staff and dividends to shareholders, rather than enhancing the financial sustainability of the sector. This causes the Committee and the wider public much concern. For the taxpayer to obtain value for money from exiting from the support depends heavily on a successful sale of the shares in RBS and Lloyds. The government shareholding is far greater than in previous share sales and will require extraordinarily careful handling to protect the taxpayers' interest. Regulatory and political uncertainty over the banking sector will remain until the Government has responded to the recommendations from the Independent Commission on Banking.
The Climate Change Levy package is the second biggest element in the UK Climate Change Programme, and savings appear to have been significant; but were strongly front-end loaded and have eased off since soon after its introduction. The Levy will reduce annual UK CO2 emissions by 12.8 million tonnes by 2010. But these savings have come mainly from the effect its announcement had on raising awareness of the potential for energy savings, and most of these savings were the result of actions taken before the tax actually came into operation. The Levy itself has had relatively little effect on business emissions, especially in the case of SMEs and large but non-energy intensive organisations. The Government believes that Climate Change Agreements (CCAs) will reduce annual CO2 emissions by an additional 7 million tonnes by 2010. Complying with CCAs has galvanised business interest in finding energy savings, and that key to this has been the incentive of the tax discount they offer. The exemptions on the Climate Change Levy for 'green electricity' and combined heat and power have had minimal effect on the construction of new renewables and CHP capacity, essentially because they are worth too little money. The CCL package does not impose a damaging economic burden on UK business overall, and is encouraging greater resource productivity and stimulating energy efficient industries. The CCL has not worked quite as expected. Instead of rationally seeking to reduce their costs through increased energy efficiency, businesses appear to have needed an extra stimulus to change their approach to energy use. This has profound implications for climate change policy more widely. If even large companies require additional policies to drive behavioural change, this must be all the more true for small businesses, public bodies, and private households.
This report examines the impact on Scotland of the current economic crisis, specifically the recapitalisation of two of its largest banks: Royal Bank of Scotland (RBS) and the newly merged Lloyds TSB and Halifax Bank of Scotland. Evidence suggests that customers are not being fairly treated by the very banks being supported by taxpayers' money to the tune of hundreds of billions of pounds. The Committee is disappointed that both banks and the Minister consider it a necessary evil to reward to certain bank executives with enormous bonuses when thousands of rank and file employees face redundancy. They are not convinced that there has been a change of culture within banks as a result of the crisis and are concerned that front-line staff are still being pressured to sell potentially unsuitable products such as loans and credit cards to customers at pre-crisis levels. Furthermore, small and medium sized businesses vital to the Scottish economy have experienced extreme difficulties in the past eighteen months in accessing the finance necessary to keep themselves afloat. This inquiry specifically covered the effect of the banking crisis on jobs, services to the public and small business lending in Scotland; the effect of the failure of Scottish banks and building societies on the international reputation of Scotland's banking sector and the effectiveness of measures put in place by the UK Government
This report looks at progress on improving accessibility since 2003 and ways of improving accessibility. Problems with transport provision and the location of services can reinforce social exclusion by preventing people from accessing key local services and undermines government policies to tackle worklessness, increase participation in education, reduce crime and narrow health inequalities. Insufficient progress has been made since the 2003 Social Exclusion Unit's Making the Connections report, many findings of which are relevant today. There is evidence that accessibility is worsening, driven by tight budgets in central and local government. Accessibility statistics show travel times to key services steadily increasing over time, particularly for access to hospitals. The Department for Transport needs to focus more closely on improving accessibility as well as on supporting the economy. Existing transport funding could be better coordinated and directed to 'accessibility'-focused initiatives, which will have a swifter impact on people's well-being than large infrastructure projects. The social value of transport and accessibility needs to be explicitly considered in policy-making and in the planning system and should no longer be seen as a second-order criterion.The Committee believes it will take time for any improvements to make a noticeable difference. Their recommendations focus on improving how government operates rather than funding. Central government cannot abdicate its role in coordinating action across departmental silos and helping local authorities and service providers to share best practice. Accessibility planning, introduced by Making the Connections, has had limited success and needs to be re-energised.
This report examines the management of financial resources to deliver better public services effectively. Divided into four parts, with appendices, it looks at the following areas: Part 1: The importance of managing financial resources; Part 2: Developing the skills and awareness necessary for effective financial resource management; Part 3: Improving departments' use of techniques and practices for managing financial resources; Part 4: The impact of improved management and financial resources. Financial rsource management is relevant to every aspect of a Government department's business. By 2010-11, central government spending is forecast to grow to £678 billion, which represents £11,000 for every person in the UK. The NAO has set out a number of findings and recommendations, including: that the lack of financial skills and awareness amongst non-finance staff remains a significant barrier to improving the management of financial resources across government; that some departments lack a qualified Finance Director at Board level; that senior managers in many departments are not provided with incentives to promote sound management of financial resources; that Departments could do more to improve their forecasting capabilities; that some Departments are not sufficiently well placed to integrate financial and operational performance information; that many Departments do not always ensure the full assessment of the financial implications of policy proposals.
This is the 31st report on senior salaries (Cm. 7556, ISBN 9780101755627) and is presented by the Review Body on Senior Salaries established in 1993. The Review Body provides independent advice to the Prime Minister, the Lord Chancellor and the Secretaries of State for Defence and Health on the remuneration of holders of judicial office; senior civil servants; senior officers of the armed forces; senior managers in the NHS (chief executives, executive directors) and other equivalent public appointments. The publication is divided into 5 chapters, with 9 appendices. The chapters cover the following areas: Chapter 1: Introduction and economic evidence; Chapter 2: The senior civil service; Chapter 3: Senior officers in the armed forces; Chapter 4: The judiciary; Chapter 5: Very senior managers in the National Health Service. There are 19 recommedations set out over these 5 chapters, including: that senior civil service base pay be increased by 2.1%; that permanent secretaries' base pay be increased by 2.1%; that the MoD produce further evidence on the job evaluation exercise of the senior military, including 4-star officers; that administrations in England and Wales, Scotland and Northern Ireland make collection of information in job weight a priority and continue work with the judiciary to collect meaningful data to show whether job weight at different levels is changing over time; that from 1 April 2009 the pay for Very Senior Managers in the NHS should increase by 2.4%. The publication sets out in various tables the recommended salaries for the above holders.
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