10-point plan to boost economy

Jan 13 2009 By Adrian Pearson, The Journal

'Outrageous' rules attacked

NEWCASTLE Building Society has hit out at "outrageous" Government rules which see them pay out more money to cover mistakes made by high street banks.

After the run on Northern Rock and the Government bailout of major banks, financial watchdogs asked for contributions to a scheme which safeguards savers’ deposits.

But as building societies have not taken as many risks as banks over the last decade they are not as big a risk, yet still pay the costs.

Colin Seccombe, Newcastle Building Society chief executive said: "We believe it is outrageous those organisations, like Newcastle Building Society, who have operated their businesses responsibly and prudently, are now being forced to pay the bill for those that took a riskier approach."

The building societies association argues it is unfair it is having to pick up a huge bill to compensate savers who lost money through the failed Icelandic banks and Bradford & Bingley when building societies are more prudently run.

It warned the money would have to come out of societies’ reserves, as unlike banks they do not have shareholders to tap for cash, and this could hit the returns to savers and the mortgage rates they offer.

Click here to read the Chamber of Commerce 'North East Business Barometer Q4 2008' report, in full.

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Services demand soars

CALLS were last night made for a council rescue package after it emerged demand for services was rocketing as the recession bites.

Councils across the North East reported a big rise in pleas for help on housing and for free school meals – and fear worse was still to come.

The Local Government Association said increases in demand for services was putting extra strain on authorities across the region.

One in four North East councils have reported an increase in homelessness and more than half have experienced a rise in housing benefit claimants as the recession kicks in.

Budget chiefs at Newcastle City Council last night said they were prepared for the downturn and would endeavour to provide high standards.

Rob Hamilton, head of economic and urban policy at Newcastle City Council, said: "In times of economic downturn there can often be a greater demand on our services, but we remain confident that the council is able to meet this need."

Mental health charities claimed people who were unable to cope emotionally with losing their job or a financial crisis were putting extra demands on mental health services.

And Margaret Eaton, the LGA chairman, said the research showed how much people were feeling the pinch.

Click here to read the Chamber of Commerce 'North East Business Barometer Q4 2008' report, in full.

Page 5: Union officials try to save fire-hit food factory