FactCheck: Brown's YouTube broadcast
Updated on 06 May 2009
The prime minister is back on YouTube this week setting out his "four pillars" for economic recovery. YouTube if you want to, Gordon, but FactCheck sees how sturdy the claims are.
The claim
"Despite opposition we intervened quickly to make sure no saver in a British bank lost a single penny."
Gordon Brown, prime minister, party election broadcast , 5 May 2009
The analysis
Rewind to September 2007. The Bank of England coughs up to rescue Northern Rock, but that's not enough for panic-stricken savers. Despite reassurances from the bank's chief executive and Alistair Darling, customers queued outside bank branches to remove their savings, triggering the first run on a bank for 150 years.
Four days later, on the evening of the 17 September, Darling intervened to guarantee all deposits at the bank.
Yet contrary to Brown's claim, at the time the move was supported by the opposition parties in parliament. Shadow Chancellor George Osborne was quoted in the Daily Mail the day after the guarantee was given, saying: "We support the action the Bank has taken on Northern Rock and given the gravity of the situation we support tonight's offer to guarantee Northern Rock deposits."
Osborne did oppose the nationalisation of Northern Rock in February, but by then the deposits already had a government guarantee.
Roll forward to autumn 2008 - the heart of the financial crisis. The government extended their guarantee for deposits in all banks from £35,000 (covering around 99 per cent of deposits) to £50,000 paid through the Financial Services Compensation Scheme. The new limit came into effect on 7 Oct 2008, but it was raised as a possibility as early as July.
Once again both Liberal Democrat leader Nick Clegg and Shadow Chancellor George Osborne offered cross-party support for the move.
So, while the government has acted to guarantee that "no saver in a British bank lost a single penny", the implication that this was done in the face of political opposition may not be as steady as a rock.
The claim
"Thanks to lower interest rates and the action we have taken on the economy, almost half a million jobs have been saved or protected."
Gordon Brown, prime minister, party election broadcast , 5 May 2009
The analysis
It's a slight deviation from the statement in Alistair Darling's budget speech when he said: "Taken together, the total policy support for the UK economy is expected to protect up to half a million jobs."
Spot the difference? Gordon Brown says jobs "have been" saved or protected, Darling takes the slightly more cautious line saying that "up to" 500,000 jobs are "expected" to be protected.
The time discrepancy aside, the number of jobs protected by the government's action is a calculated guess.
The Treasury makes its estimate based on the percentage of GDP they pump back into the economy through their economic stimulus policies. In the pre-budget report last November, this stimulus was estimated to be around 1 per cent of GDP in 2009-10.
The Treasury then forecasts that this percentage of GDP should create a certain amount of economic activity, which in turn is then translated into the number of jobs and tax revenue that this economic activity should require.
So it is really just a sophisticated guess, and it is tricky to know if these jobs will be existing, "protected" jobs, or new jobs - if indeed they exist at all.
At a time when unemployment has reached over 2.1 million, with the increase in the number of jobless people in the three months to February the largest since 1991, this estimate might not provide much comfort.
The claim
"You cannot cut your way out of recession, you've got to grow your way out of it. That's why we've announced action to help homeowners, giving them breathing space if they lose income temporarily and fall behind on payments."
Gordon Brown, prime minister, party election broadcast , 5 May 2009
The analysis
The much-heralded mortgage rescue scheme was first announced last September and came into force in January.
Under the £200m scheme, families who can no longer meet their mortgage repayments will be able to sell all or part of their property to a "registered social landlord", such as a housing association, and then rent back the property at a lower level than market rate.
The plan was supposed to help around 6,000 people in difficulty, but the Communities and Local Government Department reports that only one family has been helped in the first three months of this scheme despite reporting that 407 households who approached local authorities were at risk of repossession and in one of the "priority need" categories.
The Communities and Local Government Department does insist that the application process for the mortgage rescue scheme takes at least three months to complete, so the low numbers at this stage in starting up the scheme were expected. The department also points to the changes announced in the budget which extend the scheme to homeowners facing negative equity.
The second scheme that the government could look to for support is the Homeowners Mortgage Support scheme (HMS), where banks will allow "eligible" borrowers to cut their mortgage interest payments for up to two years if their income is temporarily cut.
Sadly for FactCheck, this scheme only came into force just two weeks ago on 21 Apr, so its effects are as yet not quantifiable.
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