NAO investigates bank bailout

The National Audit Office (NAO) is to investigate the government’s £37bn bank
bail-out and report to Parliament once there is sufficient evidence of its
success or failure.

The outcome is to be determined on keeping credit available and clamping down
on excessive bank bonus payments to City executives.

Edward Leigh, chairman of the Commons Public Accounts Committee, confirmed
the inquiry in the Commons, and issued dire warnings about the risks involved in
the government retaining a holding in the banking sector.

According to Leigh, Tim Burr, Comptroller and auditor general of the NAO, is
‘proposing to examine whether the Treasury has been able to secure compliance
with the specific commitments that the banks are making to maintain lending to
homeowners and small businesses, to help people stay in their homes and to meet
the criteria that the Treasury has laid down for senior executive remuneration.’

Leigh made it clear the investigation will not be left until a year or more
after the event but will move ahead ‘once we have seen sufficient evidence of
the Treasury’s progress towards those important objectives’.

He said there was no doubt his committee ‘will wish to keep the implications
for taxpayers under careful review following any NAO report.’

He said the temptation of the government’s acquisition of holdings as with
former nationalised industries would be to impose ‘extraneous requirements of
pay, employment, backing winners and artificial lending priorities, which will
hinder rather than help the banks’ return to financial health.’

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