Why is Stormont ducking and diving on PMS issue, asks Allister
06 December 2010
When the Finance Minister - who along with the DETI Minister has twice refused BBC Sunday Sequence interviews - admits he cannot answer relatively straightforward but essential questions relating to the PMS rescue package, then, little wonder affected savers are losing patience with and confidence in the Stormont Executive’s capacity to deliver the long overdue solution so many savers desperately require.
Following an answer in the Assembly last month, in which for the first time he talked about any Executive contribution of £25m having to be repaid, I wrote to him in the terms below, asking 12 pertinent questions. I am appalled to have received a reply in which Minister Wilson not only avoids 11 of the questions, but admits he is not in a position to answer most of my questions. He does not explain why, adding to the growing perception that the Executive is out of its depth in handling this key issue.
Some of the questions avoided included:
§ Has the Executive even yet approved the rescue package;
§ Why has he talked about a protracted state aid approval routine in Brussels when there is a special fast-track system for issues related to the banking crisis, and why is he saying Assembly legislation is necessary to seek state aid approval;
§ Is the Mutual Access Fund of £51m big enough to meet savers’ needs on a pound for pound basis, and if not, why was more not sought;
§ Why does the Executive’s modest contribution of £25m have to be repaid, particularly with Stormont, apparently, having priority claim on its £25m from PMS assets over any balance monies then still due to savers. Could a situation arise where savers go short because government must be paid back first?
These, and the others, are not difficult questions and all arise from what Minister Wilson has already said, so why is the Minister unable or unwilling to answer? These questions are vital to the interests and peace of mind of PMS savers. I really do think the Minister could and should have made an effort to address the issues. By ducking and diving he adds to the disquiet among savers and builds the impression that all is not as it should be if Stormont is going to deliver on its part of the deal to bring respite to the long suffering PMS savers, most of whom, let it be remembered, are also taxpayers, who rightly expect Stormont and Whitehall to make good on the promise that no British saver will lose out of the banking crisis.
I am fast being driven to the conclusion that not only may the deal which Stormont negotiated with the Treasury be inadequate – else pound for pound recompense would not be in doubt – but that, perhaps because of its constant deadlock and the tying of this issue into the Budget debacle, that they may not even be capable of delivering in an equitable fashion what was negotiated. Certainly, causing savers to go short because Stormont insists on having its £25m paid back first out of the assets, is not, in my view, either equitable or just. If the £25m turns out by sleight of hand to have been a mere loan and not a contribution to the access fund, like the £175m Treasury loan, then what has Stormont really done for the PMS savers, who are principally in this mess because of the regulatory gap which DETI allowed to develop?
The texts of my letter of 15 November to Minister Wilson is set out below, with a link to his reply:-
Dear Minister,
Re: PMS
Arising from your answers this week in the Assembly on the PMS, there are a number of matters I would like you to clarify.
You said, “However, a number of local and EU agreements are required before payments can be made. Executive and Assembly agreement to the overall package can be secured as part of the Budget process. The Department of Enterprise, Trade and Investment (DETI) will take the lead on the Assembly legislation necessary to seek EU state aid approval for the loan. I hope that that work will be progressed as quickly as possible. We are working towards resolving all the issues for the 2011-12 Budget. However, I remind Members that any delay in establishing and agreeing the Budget will have a knock-on impact on the PMS solution.”
1. Should one conclude from the above that as of now there is no Executive approval for the package?
2. Why are you linking Executive and Assembly approval for the package with approval of the Budget, which patently is a fraught process? Surely, the PMS package can and should be a free-standing project, because as you said later the £175m loan will not impact on the Assembly’s capital programme? So, why not get on with it, rather than tag it to the Budget?
3. What Assembly legislation is necessary to seek EU state aid approval? State aid applications do not generally require legislation, so why in this case?
4. Indeed, surely the groundwork has been laid for any state aid application (if such is necessary in view of the fact that these rules exist to prevent distortion of competition, which it is hard to see here), given that as far back as 26 April 2010 Peter Robinson told the Assembly the PM had assured him “that he would have his officials move to try to clear state aid issues” ?
5. Thus has relevant work not already been done with Brussels and in any event in view of the Commission’s special guidance in 2008 on bank bail-outs, which anticipated approval as quick as within 24 hours, is it right to create the impression that state aid approval could contribute significant delay?
You then said, “Obviously, the bigger the mutual access fund, the more money there will be to give to small investors. The Government at Westminster have put up £25 million, as have the Executive, and the Church has committed £1 million. Obviously, if the Church could provide additional money to increase that mutual access fund, there would be an ability to give much greater sums of money back to small investors.”
6. Does this mean that the mutual access fund of £51m is not big enough to meet the needs of the small savers?
7. If £51m is not enough, then why was more not sought, given the governmental boasts about no savers losing money in the banking crisis?
8. If £51m was not the sum required to restore pound for pound satisfaction, then what was the rationale in settling on this figure?
9. Is there significance in your use of the term ‘small investors’, as opposed to ‘small savers’?
Finally, you said, “The indications are that the £175 million loan that we will take out, which will not impact on the capital programme for the Assembly as it will be over and above what we have been allowed to raise through loans for capital projects, will be not only serviced but paid back. From the surplus, we will be able to reimburse the money that will be put up for the mutual access fund. That is the intention. The quicker the property market picks up, the quicker that money can be paid back. It is on that basis that we have proceeded.”
10. From the above it seems clear that you expect repayment from eventual realisation of the PMS assets not just of the £175m loan, but all the interest accumulated. Is that correct?
11. Additionally, you anticipate the Executive’s £25m also being reimbursed from the asset recovery? Is that also with interest, and will the same apply to the Treasury’s £25m and the Church’s £1m?
12. So, when the assets are realised, and should there still be money owing to savers and/or investors, where will they rank as creditors vis-à-vis government? Could a situation arise where savers and investors go short because government must be paid back first?
I would appreciate it if you could take time to answer these questions in as detailed a manner as possible.
Yours sincerely,
Jim Allister QC
