Views
Solutions to help ride credit crunch - for The Inverness Courier
SINCE parliament returned two weeks ago, the financial and economic crisis has dominated events. Gordon Brown and Alistair Darling have put forward a £500 billion plan to rescue the British banking system, which has been supported on all sides.
The plan is being copied the world over. It is not clear yet whether it will work. We are still waiting to see if banks will start the lending to each other that is the key to ensuring funds are made available to small businesses and individuals.
But as Liberal Democrat shadow chancellor Vince Cable has been pointing out for the past five years, irresponsible and unsustainable lending by banks has caused a credit boom which has caused this crisis.
The bankers have had their rescue package — the real concern should be to ensure the millions of people and families strugging to make ends meet are assisted too.
Here are a few things I am pressing government to do now, to help people through the recession.
* Cut taxes - People need more money in their pockets to help pay their heating and food and housing bills. We should be cutting taxes for people on low and middle incomes. This could be done by making the wealthiest pay more: ending upper rate tax relief on pensions, clamping down on tax avoidance, as well as stopping unnecessary central public spending.
* Cut interest rates - Despite a welcome 0.5% cut, the UK still has higher rates that the eurozone and the United States. The Bank of England needs to be pressed to cut rates by a further 1.5% by the end of the year — and banks and building societies need to pass those cuts on.
* Make repossession a last resort - The number of home repossessions is rising sharply and the number of people in serious mortgage arrears more sharply still. Rapid action must be taken to ensure banks only ever repossess as a last resort.
Regulated mortgage rescue schemes need to be put in place to allow families struggling with repayments to sell all or part of the equity in their homes and rent them back from a housing association or private firm.
* Cut energy bills - After months of soaring fuel prices, millions of people face a winter unable to heat their houses properly. As wholesale fuel prices fall, utility companies must cut bills.
The £9 billion windfall given to energy companies must be used to insulate homes, with people who use heating oil at the top of the list.
* Drop the idea of Scottish independence - If there is one lesson from this crisis it is how much we gain from being in the UK. Like Iceland, an independent Scotland would not have had the financial muscle to rescue the Bank of Scotland and the Royal Bank of Scotland.
We simply cannot afford to isolate ourselves.
* Let housing associations build homes - Public investment is critical in a recession to keep people in their jobs and prevent the total collapse of key sectors such as construction.
There is a desperate need for homes people can afford to live in, and the Scottish government should be making it easier for housing associations to build homes.
Instead, Mr Salmond's government is telling housing associations to borrow more money from the private sector, making development unaffordable. These rules need to be reversed. This is not the time to be strangling affordable housing in the Highlands.
* Give Highlands and Islands Enterprise its money back - Cutting the budget for our local development agency by £50 million always seemed stupid to me. Now it looks potentially disastrous for the local economy. We need to ensure we have the tools locally to help firms, especially small businesses, that are struggling.
The Scottish Government needs to swallow its pride and admit it got this one wrong — and get the Highlands and Islands budget back up to its previous level.
* Spend the council's capital budget - The Highland Council has a substantial programme of road and bridge repairs and school building which are vitally important to keep the local economy going.
The new administration unfroze the capital plan as one of its first acts after taking over – and the pressure needs to be kept on to ensure the money is spent.
Posted on: 21/10/2008
