Thursday, February 18, 2010
Treasury & B of E Opposed Darling's Landsbanki Bailout
Last week I revealed details of a letter from the Permanent Secretary at the DCLG opposing John Denham's policy on ocal government reorganisation. As departmental accoiunting officer, the Perm Sec wanted to cover his back should any legal action ensue. A PQ revealed this was the first time this course of action had been taken since 1997 in that Department. However, an eagle eyed reader, who is clearly a diligent student of deposited parliamentary papers, alerts me to this letter from Treasury Permanent Secretary, Sir Nicholas Macpherson to Alistair Darling on 8 October 2008. In the letter, Sir Nicholas makes clear that both he and the Bank of England disagree with the Chancellor's intention to fully guarantee the deposits of British savers in Landsbanki. Interestingly the FSA was backing Alistair Darling.
Alistair Darling immediately wrote back and told his Perm Sec he was going ahead anyway. I don't know whether this has emerged into the public domain before, but it does shine a light onto the relationship between Cabinet Ministers and their Permanent Secretaries.
Have a read of Point 5. It says "There is a written undertaking from the Icelandic government to stand behind its financial services compensation scheme." Unless I am mistaken (and I may well be), isn't this the scheme which the Icelandic government has indeed reneged on?