The UK government created a plan that consisted of funding the banks with over $90 billion, in exchange for shares, in hopes of reassuring the markets that the credit crunch would be survived. The loans received from the banks would total over $350 billion and would be used to stabilize the economy. The banks are currently reluctant to loan to one another, which is much needed for day-to-day business. The UK government has high hopes that this bailout will get cash flowing through the system once again.
The UK government decided against a U.S. style bailout for several reasons. The $700 billion bailout introduced by the U.S. government has been criticized by many. Critics say the U.S. bailout is aimed only to purchase the bad debt held by banks, and capitalize over time by doing so. This plan does not offer the banks an opportunity to recapitalize in exchange for a share holding in which could also bring the taxpayer a return. This creates a perception of greater risk for the taxpayer.
The banks are extremely satisfied with the UK’s bailout plan. They have been trying hard to earn enough cash to even the balance sheets after the runs on their share prices. Abbey, Barclays, HBOS, Lloyds TSB, Nationwide Building Society, RBS and Standard Chartered have all committed to participating in the government plan. In return for the bailout plan, the UK government is asking for preference shares. The government will require the banks to implement new rules that will control executive income and dividend payments. The banks will also be asked to lend more to small businesses and homebuyers.
The UK government has faith that they will see the same success that was achieved in Sweden, however, there is always a potential risk. If the plan were to fail, the money markets would remain frozen, and confidence would continue to decrease. If share prices continue sliding, the taxpayer will lose even more. If the banks use all of the government lending, and are unable to pay it back, the financial crisis could last for years. However, the UK government remains optimistic that bank share prices will rebound, eventually resulting in profit.
United Kingdom residents who are between the ages of 18 and 60 may be entitled to a family income support benefit if they are working less than 16 hours per week. Children between the ages of 16 and 17 are rarely entitled to such a benefit, although there are exceptions for lone parents and students who are following a training course approved by the government.
In the case of a person living with a partner, only one partner may claim a family income support benefit on behalf of both people. In order to remain eligible for this benefit, a person’s partner may not work more than 24 hours in a given week. If you claim on behalf of both yourself and your partner, their assets shall be taken into account along with your own. This policy is not intended to be discriminatory and applies equally to heterosexual and homosexual couples, regardless of marital status.
Residents of England, Scotland or Wales must open a claim application by telephone. There are freephone numbers available for both English and Welsh speakers. You may also visit a Jobcentre Plus location to make a claim in person; however, you likely shall be guided to use a public telephone to finish the claim. Northern Ireland residents should visit their local Jobs and Benefit Office or download a claims form via the Internet for job seekers allowance.
Applying for a family income support benefit requires a national insurance number. Claims representatives can look up a misplaced number if given evidence of your identity such as your birth certificate. If you do not possess a national insurance number, you must apply for one prior to applying for a family income support benefit. Partners must both provide their numbers. You will also be required to provide proof of your income within a month of making your application.
The Department for Work and Pensions takes benefit fraud quite seriously, so you must supply all information to the best of your ability and report any change in income or circumstances straight away. If you are not confident about the application process, you may consult with an adviser via your Citizen Advice Bureau. Once your application has been accepted, the Department for Work and Pensions shall determine your benefit amount. You will receive a personal allowance based on your needs. In certain cases, you shall also receive a benefit due to higher living costs related to a disability or medical condition.