Page last updated at 18:36 GMT, Tuesday, 30 September 2008 19:36 UK

Brown: We'll protect bank savings

Gordon Brown says he intends to increase the maximum protection given to savers

Prime Minister Gordon Brown has told the BBC that he will do "whatever it takes" to protect people's savings.

Moves to guarantee bank deposits up to 50,000 - compared with the current 35,000 limit - are expected shortly.

He declined to offer an unlimited guarantee, as has happened in Ireland, but pointed out the government had not let any UK depositor lose out.

He said with Northern Rock, HBOS and Bradford & Bingley they had taken action to protect people's savings.

Irish guarantee

The Irish government has made an emergency decision to guarantee the safety of all deposits in six of its main savings institutions for two years.

Lib Dem leader Nick Clegg and Scottish First Minister Alex Salmond have called for a similar guarantee for British bank customers that all their savings and deposits are safe.

YOUR SAVINGS
There is a plan to raise the threshold so each saver's first 50,000 per bank is fully protected

Under current rules in the UK, only the first 35,000 of an individual's money is fully protected should a bank collapse.

But Mr Brown told the BBC that the government had intervened where necessary and no depositors had yet lost money.

He said: "Wherever there has been a problem, Northern Rock guaranteed the deposits of those people who were saving with Northern Rock, Bradford and Bingley safeguarded the deposits by moving them to Abbey National, Halifax Bank of Scotland moved them to Lloyds TSB.

"Wherever there has been a problem we have intervened and dealt with it. Let's remember, the Irish are dealing with taxpayers' money here.

"We have got to get what's right and also what's reasonable and of course we look at every intervention that is necessary to take but I think people can see from our actions so far that depositors have been protected. No UK depositor has lost money."

Political dilemma

BBC political editor Nick Robinson said ministers faced a dilemma over guaranteeing bank deposits, as they could either reassure the public or send the wrong signal.

I think people can see from our actions so far that depositors have been protected. No UK depositor has lost money
Gordon Brown

Raising the limit on guaranteed deposits to 50,000 would not require new legislation and could just be announced by the Treasury and the Financial Services Authority.

The FSA is still consulting on the increase to 50,000, although Mr Brown said it would be in the forthcoming Banking Bill.

Figures from the British Bankers Association from 2007 suggest only 2% of UK bank accounts hold more than 50,000 and only 4% have more than 35,000.

The Conservatives have said they will support the increase in deposit protection to 50,000 and would set aside political differences to back other government measures on the economy which were needed.

David Cameron told the Conservative party conference that political leaders must work together to tackle the current crisis and avoid the "political wrangling" seen in the US.

To that end, he has dropped his call for the Bank of England to be given enhanced powers to rescue banks to ensure a government bill to stabilise the banking system can be passed in the next few weeks.

After meeting his opposite number Alistair Darling on Tuesday, shadow chancellor George Osborne said the Tories would work in a "spirit of co-operation" with the government on the financial crisis.

But he stressed that did not mean giving Labour any "blank cheques".


SEE ALSO
Cameron: We're in this together
30 Sep 08 |  UK Politics
Guarantee bank deposits - Clegg
30 Sep 08 |  UK Politics
Bush warning over bail-out delay
30 Sep 08 |  Americas


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