Darling Announces Changes to Help Savers

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 withmoney 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 beenare 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 firstplace a better regime."
£2,000 of their deposits absolutely protected, butHowever, George Osborne, the shadow chancellor,
only 90 per cent of the next £33,000. The movehas criticised Mr Darling for supposedly promising one
can be seen as an attempt by Mr Darling, whothing 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 avoidcommented.
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 heguaranteed up to £100,000, only to change his
admitted he was considering adopting a US-stylemind ten days later and offer protection at a much
system which would move deposits held in a collapsedlower level? What people want in a period of financial
bank into a specially designed holding body beforeinstability is certainty, not fiddling."
being paid back to savers.Michael Fallon, a fellow Conservative who serves on
However, this most recent development will not dothe 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 takethroughout," 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 factmaking it up on the hoof. The amount keeps changing.
that freedom from risk cannot be guaranteed - and soIs it going to go down to £10,000 in a week. I
consumers with investments in bank savings accountsthought 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 dealaccusations by saying that the announcement is the
with it quickly to maintain stability and confidence," hefirst of many and that further developments will be
said in his speech, delivered at the Reuters building inforthcoming - including a consultation on the
Canary Wharf.compensation system - in the near future.