Martin Hannan: Bankrupt Brown runs out of time

Published on Wednesday 29 July 2009 10:00

GORDON Brown's time as Prime Minister is numbered in weeks rather than days. Not because he has lost another by-election, but because of his role in the Great British Bank Robbery.

Across this city, many people in the banking industry have lost their jobs, and I have every sympathy for them. For their bosses past and present, however, I have nothing but utter contempt for their role in cynically and unlawfully thieving the money of millions of Britons.

Now Gordon Brown and Alistair Darling must decide whether they, too, will continue to be complicit in the biggest financial scandal of the age, one that may yet make the MPs' expenses row look trivial.

Most people are aware that Britain's banks have been systematically ripping off their clients for years by piling excessive punitive charges on current account holders, often for trivial "offences" such as going overdrawn by a few pennies.

The Law Lords are presently considering their verdict on the long drawn-out court case between the banks and the Office of Fair Trading – a full government department don't forget – which considers the charges to be excessive. Under the Unfair Terms in Consumer Contracts Regulations 1999, the OFT wants banks to charge possibly 12 per item rather than the 35 they presently charge.

Those bank charges are worth in excess of 2 billion per year profit to the British banks, and since the OFT ruling would be retrospective over a six-year period at least, they face paying out 12bn-plus in returned charges and interest.

The scale of the Great British Bank Robbery is colossal. One million complaints and 27,000 court cases have been put on hold pending the outcome of the case, which will happen any day now. The banks have already lost twice – the Law Lords are expected to make it a hat-trick.

At that point the banks will have to decide whether or not to go to the European Courts, prolonging the issue for years, or to accept that the OFT has won its case and repay the money.

Either way, Brown and Darling will lose. The government now owns two of the seven banks which are in court against the OFT – yes, that's right, government-owned banks are up against a government department. Franz Kafka on LSD couldn't have made it up.

No doubt McTweedledum and McTweedledee will say they have no influence as everything is being done at arm's length through UK Financial Investments, the government vehicle which holds the bank shares. But the PM and Chancellor cannot be "hands off" when a government department is involved.

If they sanction the banks appealing to European justice over British courts, everyone will see them as traitors – not even David Cameron could miss that target, and surely even New Labour's own rank and file would not stomach un-Britishness of that calibre.

Alternatively, if they use the government's ownership of RBS and Lloyds to start paying back the charges, they risk another bank crash as shareholders realise the implications – no profits for the foreseeable future.

This issue is paralysing Britain already. The banks are sitting on every penny and not lending money commercially, as they were required to, partly because they know what's coming and will need the funds for repayments.

Yet conversely, this issue could save Brown and Darling's reputations, though only if they show some hitherto hidden backbone and moral correctness. If they force the banks to drop the court action, they could yet be hailed as heroes, as champions of the people, and not the bankers' pals. All those millions of people getting their money back might even be an immediate cash boost to the economy.

If they do act like men and not wimps, they will still have to deal with the damage – it would be devastating – caused to banks such as the government's own RBS and Lloyds. A further share collapse, maybe even a run on a bank, and they would have to go. Unlike before, the media is on high alert both for this issue and for Brown and Darling's foibles in general. Serious questions will be asked, the London-based tabloids will go bonkers, parliament may even be recalled and there will be nowhere else for them to run.

The logic of their no-win situation is incontestable. The impending bank charge scandal will finally bring down Brown, Darling and the whole crumbling New Labour edifice. Remember you read it here first.

Glorious Gathering

Apart from the usual traffic jams caused by the city council's perennial failure to realise that traffic lights need to be adjusted when nearby roads are closed, I thought The Gathering was absolutely splendid.

There was great entertainment over two days at Holyrood, visitor numbers were better than expected and the clan parade up the Royal Mile was terrific fun, though certain participants looked fair puggled long before they reached the Tron Kirk.

The booing of Clan Campbell during the parade was mostly good natured – those MacDonalds get everywhere – and the sight of so much drink being taken and sharp implements displayed was typically Scottish, as it was just like a Friday night in Glasgow.

Organisers Jamie Sempill and Jenny Gilmour and all involved should be congratulated and invited to do it all again. But as Jamie himself suggested, maybe in about four years' time, when livers and wallets will be rejuvenated.