| A recent new ruling announced by Alistair Darling, the | | | | "Savers need to be sure that they can get their |
| Chancellor of the Exchequer, means savers with | | | | money out if they need to. |
| money in banks and building societies will have the first | | | | "That is why in the current market circumstances we |
| £35,000 of their deposits guaranteed, it has been | | | | are providing a guarantee for Northern Rock's |
| revealed. | | | | depositors. But for the future, we now need to put in |
| Previously, savers would have had the first | | | | place a better regime." |
| £2,000 of their deposits absolutely protected, but | | | | However, George Osborne, the shadow chancellor, |
| only 90 per cent of the next £33,000. The move | | | | has criticised Mr Darling for supposedly promising one |
| can be seen as an attempt by Mr Darling, who | | | | thing and delivering another. |
| announced the change alongside Alan Greenspan, | | | | "Alistair Darling has piled confusion upon confusion," he |
| former chairman of the US Federal Reserve, to avoid | | | | commented. |
| another Northern Rock-type crisis. | | | | "Why did he tell one newspaper that savings would be |
| He had hinted at the move just last week when he | | | | guaranteed up to £100,000, only to change his |
| admitted he was considering adopting a US-style | | | | mind ten days later and offer protection at a much |
| system which would move deposits held in a collapsed | | | | lower level? What people want in a period of financial |
| bank into a specially designed holding body before | | | | instability is certainty, not fiddling." |
| being paid back to savers. | | | | Michael Fallon, a fellow Conservative who serves on |
| However, this most recent development will not do | | | | the Treasury Committee, echoed this view. |
| away with the need to carry out a radical overhaul of | | | | "Northern Rock has been given preferential treatment |
| the compensation system, which is expected to take | | | | throughout," he told the Times. |
| place in the next parliamentary session. According to | | | | "The compensation scheme is chaotic. They are |
| Mr Darling, the changes are in recognition of the fact | | | | making it up on the hoof. The amount keeps changing. |
| that freedom from risk cannot be guaranteed - and so | | | | Is it going to go down to £10,000 in a week. I |
| consumers with investments in bank savings accounts | | | | thought it was going to be £100,000 a week ago." |
| need to be protected as far as possible. | | | | An aide to Mr Darling has responded to these |
| "If a problem does happen, we need to be able to deal | | | | accusations by saying that the announcement is the |
| with it quickly to maintain stability and confidence," he | | | | first of many and that further developments will be |
| said in his speech, delivered at the Reuters building in | | | | forthcoming - including a consultation on the |
| Canary Wharf. | | | | compensation system - in the near future. |