Taxpayer 'may avoid paying out' for UK's banks rescue

Prop: banks were given guarantees in the wake of the financial crisis after Lehman Brothers' collapse two years ago

11 April 2012

The National Audit Office today said for the first time that taxpayers will probably not have to pay out on the billions of pounds of guarantees it gave British banks to get them through the financial crisis.

The Treasury had estimated that the cost of the support through the Asset Protection, Special Liquidity and Credit Guarantee Schemes could be as high as £50 billion.

But the NAO warned hopes should be "tempered" by the fact that further shocks to the financial system could derail its forecasts, and that, whatever happens, the Treasury is likely to be paying for the support it has provided UK banks for many years.

The scale of support has fallen from its peak of £955 billion to £512 billion but the amount of cash borrowed by the Government to pay for these props has risen by £7 billion in the past year to £124 billion.

It costs the Treasury £5 billion a year to service that extra borrowing, the NAO said.