In Parliament

Banking Action Plan 08 October 2008

After consulting with the Bank of England and the Financial Services Authority, the Government has announced that it is bringing forward specific and comprehensive measures to ensure the stability of the financial system and to protect ordinary savers, depositors, businesses and borrowers.

In summary the proposals announced today are intended to:

• Provide sufficient liquidity in the short term;
• Make available new capital to UK banks and building societies to strengthen their resources permitting them to restructure their finances, while maintaining their support for the real economy; and
• Ensure that the banking system has the funds necessary to maintain lending in the medium term.

The measures outlined are essential to protect ordinary people, their jobs, houses and saving deposits. We have to ensure that people and small businesses in Newport East can continue to lend money from high street banks so normal transactions in our area can continue in the long term.

In short, the Government will make available £200 billion to Banks under its special liquidity scheme and additional recapitalisation fund of £25 billion; this will done by investing in Banks via shares. The Banks which have signed up for this scheme are:

• Abbey
• Barclays
• HBOS
• HSBC Bank plc
• Lloyds TSB
• Nationwide Building Society
• Royal Bank of Scotland
• Standard Chartered

However, other institutions may also apply to access these recapitalisation funds if required.