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Banks should have been charged more for APS, says Audit Office

RBS received a £25.5bn cash injection from the government

The coalition government will be subjected to criticism for not levying an adequate fee on Lloyds and the Royal bank of Scotland (RBS) for providing insurance for their bad loans in a report to be released this week by the National Audit Office, reports the Times.

The scheme was created in 2009 to provide immunity to banks against potential losses on their bad assets. Llyods opted out of the deal following a long period of negotiation, choosing instead to raise capital from investors.

RBS on the other hand insured £282bn worth of assets under the plan and received a £25.5bn cash injection from the government.

The £2.5bn fee for the asset protection scheme (APS) became an issue of contention with Llyods arguing that it need only pay a sum of £500m as it did not enter the scheme in the end. RBS entered into a deal with the Treasury to pay £500m annually for five years with an exit option should the bank opt out of the scheme.

The report also contains details of the millions of pounds of expenditure incurred on lawyers from Slaughter and May and investment bankers from Citigroup and Credit Suisse who advised on the plan.

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.