Five questions answered on Lloyd Bank’s large pre-tax losses

£570m loss for 2012.

Lloyd Banking Group today posted huge pre-tax losses for 2012. We answer five questions on Lloyd’s current losses.

What’s the amount of Lloyd’s pre-tax losses?

The 39 per cent state owned group is reporting a £570m loss for 2012.

Why so much?

The bank set aside a £1.8bn rise in mis-selling provisions last year, which has dented its profit margins. Last week, it was also fined £4.3m for delaying compensation payments to customers over PPI mis-selling.

However, take away the money set aside for the mis-selling claims - £1.5bn for payment protection insurance and £310m for interest rate swaps – the lender said underlying pre-tax profit jumped from £638m to £2.6bn.

The consumer association Which? estimate that the bank’s latest update took the total amount set aside for PPI by the industry to £15bn.
Will Lloyd’s bankers still be getting their bonuses? 

Most likely. The bank has set aside £365m to pay staff bonuses and would hand its chief executive, Antonio Horta-Osorio, a deferred share award worth £1.49m.

"I came here with the main objective of getting taxpayers' money back and, therefore, I thought it would be appropriate to make my bonus entirely conditional to us getting to the taxpayer entry price," Lloyd’s Chief Executive Mr Horta-Osorio told journalists.

What else has he said in regards to this pre-tax loss?

In Lloyds’s annual report statement he said:

"Since setting out our strategy in June 2011, we have significantly strengthened the balance sheet and substantially improved efficiency and focus, while continuing to work through legacy issues.

"We are investing in our simple, lower-risk, customer-focused UK retail and commercial banking model, and in value-for-money products and better capabilities to continue to support UK households, businesses and communities."

What have the experts said?

The figures provided good news for the government former investment banker Heather McGregor told the BBC . "We hear that the government is looking to exit sooner rather than later, and if I was the government I would be doing that. I'd be looking at these figures going 'yes, I can get my money back much quicker'," she said.

Lloyd Banking Group today posted huge pre-tax losses for 2012. Photograh: Getty Images

Heidi Vella is a features writer for Nridigital.com

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How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.