No easy wins for Irish Government in their battle with the banks
It is a good bet that standard variable mortgage rates might fall in the months ahead, but not massively?
‘This is a messy one for Minister for Finance Michael Noonan and his colleagues. The Central Bank does not want powers to control interest rates and in its report to the Department of Finance is believed to say that the average profits being made on lending are not excessive.’
Like a parent trying to insist some older offspring behave themselves before they finally move out of home, the Government is trying to control the behaviour of the banks, while at the same time promising to get them off the State books as soon as possible. Trouble is it will take a good while to get them to pack up and move on completely, and in the meantime they aren’t doing what they are told.
Helped by the public mood which holds that the banks are showing little gratitude for being bailed out, the Government has no problem in painting them as unreasonable. The banks are fingered for exercising their veto to turn down personal insolvency arrangements, for being too quick to take court action in cases of arrears and for profiteering from high standard variable mortgage rates.
There is some validity in these claims, but we need a reality check, too. No banking system can deliver a perfect blend of rock-bottom mortgage borrowing rates and zero home repossessions, not least our battered banks, which are still recovering from the crisis. Ministers know this, even if they might not say it, and so the mortgage arrears package was set up to go so far, but not to undermine the fundamental system of secured mortgage lending. Because if banks can’t take your home as security, then they will charge you a lot more for your loan.
In fighting on a couple of fronts against the banks, the Government needs to be careful how it sets up the battleground. On mortgage arrears, the political goalposts are, at least, moveable, though this is a problem the Government can never be seen to “solve”. But on mortgage interest rates it risks a defeat if the banks won’t move – which is why in next week’s meetings with bank chiefs, Minister Michael Noonan will give a “move or else” messageto the bankers.
The mortgage arrears package announced this week was designed to make the insolvency process more accessible and efficient, and also to encourage banks and borrowers to do deals more readily outside this process. This will help some dealing with debt, but won’t change the fundamental maths for many who can’t afford their mortgage. It will be presented as putting manners on the banks, though the banks won’t be too concerned about the veto move, which will only be relevant in a limited number of the cases.
Banks have been too slow to deal with arrears – largely in collusion with the authorities in the period up to mid-2013. Now progress is finally being made and the banks are acting, even if this creates its own problems for the Government.
Damage limitation
Politically, this is a case of damage limitation, as the Government can’t end repossession actions altogether. The State can’t pay people’s mortgages on an ongoing basis. And it can’t abandon the whole system of secured lending, as doing that would push up the cost to everyone of getting a mortgage. And this brings us to the other battlefront.
While there are 30,000-plus in long-term arrears, there are 300,000 or so on standard variable mortgages. This is an even trickier political problem both because of the numbers involved and because the Government will now be seen to either “win” or “lose”, depending on whether the banks agree to cut rates, or not. Ministers have framed this as a move by Government to get the banks to act and unless the banks move, they will be seen to have lost.
This is a messy one for Minister for Finance Michael Noonan and his colleagues. The Central Bank does not want powers to control interest rates. In its report to the Department of Finance, it is believed to say that the average profits being made on lending are not excessive. But this average counts in tracker mortgage, which are yielding very low returns to banks.
The Central Bank’s own figures show that standard variable mortgage rates here are high relative to the rest of Europe. The report makes the point that, in a properly competitive market, this Irish mortgage rate premium would be eroded by competition. Unfortunately, as banks across Europe retrench behind national borders, there is no sign of a new entrant to shake up the market here.
Intriguingly, the report also says that it might be wise for banks to reduce their standard variable rates, to head off a likely response from the political system.
But what might that response be ? No doubt Noonan will not be backward in going forward when he meets the bank chiefs. So far State-owned AIB has cut standard variable rates , but the other banks say they won’t move .
The political hectoring won’t bother them too much. What might is increased competition among existing lenders for switcher business – there are some signs of this for those on low loan-to-value ratios – or the threat of any real action from Government. Noonan will have to persuade them that this threat is real.
A Bank levy?
Would the Government increase the bank levy? Or would it push the Central Bank to introduce some cap on rates? I suspect Ministers will try to up the pressure first, in the hope that some movement comes. The tough talking from Ministers suggests they believe some of the banks, at least, will move, though by how much is another question. And the flipside is likely to be lower rates for depositors.
A properly competitive banking market is the real fix for this, but we are a long way from that yet. I would bet that standard variable mortgage rates might fall in the months ahead, but not massively. They will remain stuck stubbornly above the level elsewhere in Europe. The best result the Government might get out of this battle with the banks is a draw.
An Aer Lingus takeover would boost tourism in Ireland
The deal would secure the carrier’s future, says ITIC chief
Tourism bosses support IAG’s bid for Aer Lingus, new research shows.
Almost 70% of respondents were broadly in favour of the proposed sale of Aer Lingus to IAG in a new poll.
Just 20% were opposed, while 12% classed themselves as “undecided” or “don’t know”. The poll of 88 senior tourism executives was conducted on behalf of the Irish Tourism Industry Confederation (ITIC).
The Government still has not made a decision about whether or not to sell to IAG, six months after IAG made its preliminary approach to buy the airline. It is offering to pay a total of €2.55 per Aer Lingus share. The company’s shares traded around the €2.40 mark last week. The Government wants assurances on the future use of Heathrow slots, connectivity and jobs.
“The deal would secure the future of the carrier and opens up global connectivity opportunities that otherwise would not be realised” said ITIC chairman Paul Gallagher.
The poll also revealed the tourism bosses felt negatively towards the Government’s new tourism plans. The targets set are not ambitious enough, senior industry executives believe.
Tourism Minister Paschal Donohoe’s three main aims are to grow revenue from overseas tourism to €5bn per year, increase the number of people working in the sector from 200,000 to 250,000 and attract 10 million visitors to Ireland by 2025.
The steps it wants to take to reach those aims include encouraging more events, festivals and conferences, improving training and skills standards in the industry and ensuring the communities and local authorities play a stronger role.
But less than a third of respondents to the tourism poll endorsed the targets. One in three gave them a negative rating.
“The last tourism policy document from the period 2003-2013 had a target of 10 million visitors and €6bn to be achieved by 2013.
“We should be more ambitious, given that almost eight million visitors will come here this year,” said Gallagher.
Looking beyond the sale of Aer Lingus and Government targets, the research showed healthy growth in the tourism industry, with the majority of businesses predicting growth in profitability and employment in the next three years.
Almost two out of three are planning to grow capacity between now and 2018. One in eight is planning for 20% plus expansion.
Only 2% of doctors signed up for free Irish GP care for under-6s scheme
Says a survey
Just 2% of GPs have signed up to the free GP care for under-6s scheme, according to a new survey.
The independent poll, commissioned by the National Association of General Practioners (NAGP), was carried out between May 13- 16 and surveyed 1,048 GPs.
It suggests that only 21% of GPs intend to sign up for the scheme before the May 27 deadline, while 23% plan on signing over the next three months.
The figures fall far short of the minimum threshold of 40% set by the Minister for Health.
A significant proportion of the 1,048 GPs surveyed remain unsure. Just under 30% remain unsure about signing before May 27 and 43% are unsure whether they will sign of not sign before September.
Of the unsure group, 52.4% said they are more likely not to sign that to sign.
Of note, 75% said they feel coerced and under duress to sign the contract.
It has also emerged in certain areas around the country, all GPs are planning to actively boycott the scheme, which is due to be rolled out from July.
NAGP chief Chris Goodey said that as well as a lack of information available to doctors, the free GP care scheme also poses a litany of other issues.
“We’re consistently seeing mass emigration of GPs and this doesn’t do anything to curb that trend,” he said.
“We still stand by the fact that it doesn’t provide [for] any of the inequities of care, for example you could still have a child who is disabled or has cancer who is seven years old, who’s paying for their treatment and paying to see a GP ,and yet you see a perfectly healthy under-6-year-old getting free treatment.”
New drug offers hope to cystic fibrosis patients
A new groundbreaking” cystic fibrosis therapy could profoundly improve patients’ quality of life, say doctors.
Patients often die before their 40s as mucus clogs and damages their lungs and leaves them prone to infection.
A major trial on 1,108 patients, in the New England Journal of Medicine, showed a combination of drugs could bypass the genetic errors that cause the disease and may increase life expectancy.
The Cystic Fibrosis Trust said it could “improve the lives of many”.
One in every 2,500 babies in the UK has cystic fibrosis.
Errors in sufferers’ DNA – inherited from their parents – damage the microscopic machinery that controls salt and water levels in the linings of the lungs.
The result is a thick mucus that inexorably damages the lungs.
Antibiotics help prevent infection and drugs can loosen the mucus, but nothing deals with the fundamental problem for most patients.
The combination of drugs – lumacaftor and ivacaftor – were designed to repair that microscopic machinery.
The trial showed that those patients given the cocktail for 24 weeks had better lung function.
Cystic fibrosis also affects the mucus lining in the gut so the doctors were pleased to see the patients also gained weight in the trial.
‘A fundamental treatment’
Prof Stuart Elborn, who led the European part of the trial from Queen’s University Belfast, told the BBC News website: “This is very exciting and it really demonstrates that we can correct the basic defects in cystic fibrosis.
“This is likely to become a fundamental treatment for cystic fibrosis.
“Starting in children may prevent the disease process developing if we correct the basic defect early in life.
“Will this improve survival for people with cystic fibrosis? We would anticipate it would have a really good chance of doing that, but we don’t know for sure yet.”
There are however, many types of error in the DNA that can culminate in cystic fibrosis.
This treatment combination should work on around half of patients, while one of the drugs on its own corrects a small proportion of errors.
New treatments are still required for the remaining patients.
‘Groundbreaking’
Susanna McColley, professor of paediatrics at Northwestern University, said these were “groundbreaking findings” that showed the future of treating cystic fibrosis.
She told the BBC: “For subjects I’ve cared for, they felt better in ways that are not necessarily measurable.
“One young woman said, and this is a direct quote, her CF ‘is not a problem’.”
Janet Allen, the director of research at the Cystic Fibrosis Trust charity, said: “These results open up a new front in the fight against cystic fibrosis and this combination therapy looks set to be an important additional treatment option that could improve the lives of many.
“As this leading edge of science continues to be explored and better understood, we are hopeful that a future of personalised medicines is increasingly within reach.”
The therapy is being examined by regulators around the world
New 1,000ft tower built in the heart of the Amazon rain forest to monitor climate
It is taller than the Shard and the Eiffel Tower and dwarfs the Statue of Liberty
The massive tower has been built in a remote part of the Amazon jungle.
Research teams must work amid the jaguars, snakes and jungle threats
It’s equipped with dozens of scientific instruments to monitor atmosphere
The structure is taller than the Eiffel Tower, The Shard and Statue of LibertyA huge tower dwarfing some of the world’s greatest landmarks has been erected in the heart of the Amazon rainforest in a bid to gather new data on the state of our atmosphere.The Amazon Tall Tower Observatory stands 1066ft (325m) high in a remote part of the Amazon jungle, where it was constructed and will be operated by a team of two amid the threat of jaguars, snakes and other wild animals.Equipped with scientific instruments to monitor greenhouse gases, the weather and aerosols, it is hoped data taken by the tower revealing changes in our climate will one day help inform lawmakers.+11
The Amazon Tall Tower Observatory sits in the remote Amazon jungle around 95miles northeast of Manaus+11
A worker paints the massive structure as he hangs at a head-spinning height above the rainforest canopy+11
The worker trusts his safety harness as he leans backwards to paint the massive metal tower11
At a height of 1,066ft (325m), it is three feet taller than the Eiffel Tower and about 50ft taller than The Shard
A worker monitors scientific instruments on a much smaller tower nearby as the Amazon Tall Tower Observatory is seen stretching upwards in the distance
The sun sets over the extremely remote and untouched part of the rainforest where the tower was constructed
Construction of the joint German-Brazilian initiative began in 2009. Located 95miles northeast of Manaus, it will begin collecting data later this year.
Dr. Jurgen Kesselmeier, the project co-ordinator, said because the Amazon rain forest remained the largest contiguous rainforest on earth, the tower’s remote location was perfect for studying scientific properties of the atmosphere without interference from humans.
He said: ‘The height of the measuring tower will allow us to investigate the transport of air masses and their alteration through the forest over a distance of several hundred kilometers.’
Antonio Manzi, a researcher for the National Institute of Amazonian Research in Manaus, told The Independent: ‘For science, this is a very big and complex piece of work.
‘Here in Brazil, we had a great and well-documented interest in having a tall tower to better study the mechanisms of the atmosphere’s surface. Various scientific questions made this a necessity.’
The tower has taken the crown of the tallest structure in South America, and dwarfs famous landmarks across the globe.
It is three feet taller than the Eiffel Tower, about 50ft taller than London’s Shard and more than 700ft higher than New York’s Statue of Liberty.
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