HBOS deal buys Brown breathing space

HBOS deal buys Brown breathing space

Thursday, 18, Sep 2008 05:53

Gordon Brown is winning rare positive coverage for his part in today's Lloyds TSB-HBOS merger.

But any relief was short lived, with a new Ipsos Mori poll putting the Tories above 50 per cent for the first time since Margaret Thatcher was in charge.

Mr Brown's attempts to convince Lloyds to take over HBOS are a high stakes political gamble, but it plays directly into the message emanating from the government – that the former chancellor is the right man to lead Britain in tough economic times.

It was not a message many financial observers were open to before yesterday.

Independent or not, the Bank of England and the Treasury left most pundits unimpressed by a nervous, dithering approach to current crisis totally at odds with the swift actions of the US Treasury and Federal Reserve.

But Mr Brown's decision to offer Sir Victor Blank, Lloyds chairman guaranteed facilitation still holds considerable risk. While it appears to have kept the impending HBOS disaster out of taxpayer's pockets it could still result in tens of thousands of angry voters being on the dole.

Accord, the union for HBOS workers, spoke out against the move.

Ged Nichols, its general secretary said: "Everybody is acknowledging that the current market turmoil is unprecedented and that HBOS is a fundamentally sound, profitable and well capitalised business.

"If ever there was a case for government intervention this is it. Nobody would advocate a 'bail out' but the government could have taken steps to help HBOS through this difficult period – and it would have had its investment repaid in full as has been the case when governments have intervened in banking crises in the past."

Nevertheless, most assessments welcome the decision of Mr Brown and John Hutton, business secretary, to keep the deal away from the Competition Commission in "the public interest".

It was the kind of move seized on by those intent on getting Labour through its current period of internecine fighting.

"I'm not pretending that with the economy as it is and with global conditions as they are, that that is good for the party of government," Alistair Campbell, Tony Blair's former press spokesman, told the BBC.

"But I'd rather have Alistair Darling there, and I'd rather have Gordon Brown there, than [David] Cameron and [George] Osborne - about whom frankly the public know absolutely nothing."

Former deputy prime minister John Prescott took up the same line of argument, saying the current period of global crisis meant Mr Brown was "the best man for the job" and Labour MPs needed to "get behind your man".

It remains to be seen whether it will make any significant difference to the party's poll rating. The new Ipsos Mori poll put the Tories on 52 per cent among those certain to vote, with Labour unchanged on 24 per cent and the Liberal Democrats dropping four points to 12 per cent.

Among the general public the figures put the Tories on 45 per cent, Labour on 29 per cent and the Liberal Democrats on 14 per cent.