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Banks must pass on cuts - Darling Banks must pass on cuts - Darling
(1 day later)
Chancellor Alistair Darling has urged mortgage lenders to pass recent interest rate cuts on to homeowners.Chancellor Alistair Darling has urged mortgage lenders to pass recent interest rate cuts on to homeowners.
He said it was time lenders "played their part" after being helped by the Bank of England putting £15bn into the markets, amid the credit crisis. He said it was time lenders "played their part" after being helped by the Bank of England putting £15bn into the markets amid the credit crisis.
Meanwhile, prime minister Gordon Brown said the chancellor would meet with the main lenders to discuss measures to ensure cuts are passed on to borrowers. Meanwhile, Prime Minister Gordon Brown said he and the chancellor would meet with the main lenders to discuss measures to help the mortgage market.
He also urged banks to "come clean" about their potential bad debts.He also urged banks to "come clean" about their potential bad debts.
Mr Darling was speaking to the BBC in Washington where he has been attending a meeting of G7 finance ministers.Mr Darling was speaking to the BBC in Washington where he has been attending a meeting of G7 finance ministers.
He came under immediate attack from Tories, as shadow chancellor George Osborne observed: "Everybody wants to see the cost of living come down for homeowners. He came under immediate attack from the Tories, with shadow chancellor George Osborne saying: "Everybody wants to see the cost of living come down for homeowners.
"But when it comes to the decisions Alistair Darling actually has control over, he has raised the cost of living with tax rises in his most recent budget."But when it comes to the decisions Alistair Darling actually has control over, he has raised the cost of living with tax rises in his most recent budget.
Further stepsFurther steps
"Instead of commenting from the side lines, he should be showing leadership on alleviating the burden on people in these tough times.""Instead of commenting from the side lines, he should be showing leadership on alleviating the burden on people in these tough times."
The Bank of England last week cut UK interest rates to 5% from 5.25% in a bid to spur the economy amid the global credit crunch.The Bank of England last week cut UK interest rates to 5% from 5.25% in a bid to spur the economy amid the global credit crunch.
I am determined that we do everything we possibly can to support homeowners, businesses and the wider economy Chancellor Alistair DarlingI am determined that we do everything we possibly can to support homeowners, businesses and the wider economy Chancellor Alistair Darling
It is its third cut in interest rates since December.It is its third cut in interest rates since December.
The largest mortgage lenders have said they will pass on the cut to their mortgage customers who pay variable rates.The largest mortgage lenders have said they will pass on the cut to their mortgage customers who pay variable rates.
But experts have predicted the cost of borrowing will continue to rise.But experts have predicted the cost of borrowing will continue to rise.
In a strongly-worded interview, Mr Darling said: "The Bank of England has put £15 billion into the financial system. In a strongly-worded interview, Mr Darling said: "The Bank of England has put £15bn into the financial system.
"It has made it very clear it is prepared to take whatever action is appropriate to support the financial system in Britain."It has made it very clear it is prepared to take whatever action is appropriate to support the financial system in Britain.
Great DepressionGreat Depression
"We are prepared to play our part. In turn, what we are saying to banks is you have got to help people as well."We are prepared to play our part. In turn, what we are saying to banks is you have got to help people as well.
"If you can pass on those interest rate reductions, if you can help homeowners, help businesses, that will help all of us get through a very difficult time.""If you can pass on those interest rate reductions, if you can help homeowners, help businesses, that will help all of us get through a very difficult time."
The government cannot forces banks to pass on the cuts, but it can make clear its frustration and Mr Darling's intervention is his toughest yet. The government cannot forces banks to pass on the cuts but it can make clear its frustration and Mr Darling's intervention is his toughest yet.
Although the Bank of England has cut rates in recent months, the banks have not always been passing those reductions to their customers Prime Minister Gordon BrownAlthough the Bank of England has cut rates in recent months, the banks have not always been passing those reductions to their customers Prime Minister Gordon Brown
He conceded on Friday that the present turbulence was "the biggest economic shock since the Great Depression".He conceded on Friday that the present turbulence was "the biggest economic shock since the Great Depression".
But in his interview with the BBC, he downplayed fears that the UK is heading for a 1990s-style housing crash.But in his interview with the BBC, he downplayed fears that the UK is heading for a 1990s-style housing crash.
"The key thing though is, unlike in the past, our interest rates are a lot lower."The key thing though is, unlike in the past, our interest rates are a lot lower.
Low unemploymentLow unemployment
"And, critically, whereas in the early 1990s you had three or four million people out of work, today unemployment is the lowest it's been since the mid 1970s."And, critically, whereas in the early 1990s you had three or four million people out of work, today unemployment is the lowest it's been since the mid 1970s.
"So the fundamentals are much, much better than they were at that time, and I'm determined that we do everything we possibly can to support homeowners, businesses and the wider economy." "So the fundamentals are much, much better than they were at that time and I'm determined that we do everything we possibly can to support homeowners, businesses and the wider economy."
The chancellor's appeal to banks was echoed by Mr Brown in an article for the News of the World.The chancellor's appeal to banks was echoed by Mr Brown in an article for the News of the World.
"Although the Bank of England has cut rates in recent months, the banks have not always been passing those reductions to their customers," he wrote."Although the Bank of England has cut rates in recent months, the banks have not always been passing those reductions to their customers," he wrote.
"So Alistair Darling with be meeting with the main mortgage lenders to discuss what further steps can be taken.""So Alistair Darling with be meeting with the main mortgage lenders to discuss what further steps can be taken."
The meeting is expected to take place on Tuesday morning at Downing Street.
Mr Brown added: "If the world's largest banks could come together quickly and agree as a group to come clean about the potential bad debts they face, we could reduce the uncertainty and risk they face and restore confidence back into the markets."Mr Brown added: "If the world's largest banks could come together quickly and agree as a group to come clean about the potential bad debts they face, we could reduce the uncertainty and risk they face and restore confidence back into the markets."