Sir, At one level, Camilla Cavendish (Comment, March 20) is quite right to berate the Bank of England for its weak performance in the face of the credit crisis. Arguably the Bank has remained “behind the curve” ever since its decision last August not to follow the Federal Reserve and the European Central Bank in supplying additional liquidity.

However, it is the flawed nature of the current supervisory regime that is most to blame. The removal of the supervisory responsiblility from the Bank led to it downgrading the intelligence network that previously had given it such good information on the underlying circumstances of the banking system. Equally, the Financial Services Authority, with its multifaceted responsibilities for all aspects of the financial sector, failed to pick this up in an appropriate manner. I have always found it difficult to see the logic of separating the bank supervisory function from that of lender of last resort. It may, I suppose, be too much to hope that the separation will be reversed under the present Prime Minister.

John Bishop

Cowden, Kent

Sir, Carol Wilcox (letter, March 20) calls for a debate on “the land market which underpins property prices”, and argues for annual land value taxation as a cure for economic turmoil. She misunderstands the mechanics and interrelationship of the financial and property markets. Land prices are a result of demand for property which is, in turn, a result of the cost and availability of finance. Greater efficiency in land and property markets would indeed be desirable but would do nothing to ameliorate the sort of problems we are now seeing in the wider economy.

Annual land taxation is just one of the many types of property taxation that have been debated and tried for centuries. Property taxes are always controversial but these also have proved to have little or no effect on the economic cycle, even where specifically aimed at development value. The latest failed attempt was the Development Land Tax Act 1976.

Nick Elsley

London N20

Sir, In seeking to pin the blame for the present financial crisis on public service pensions, Bill Parish (letter, March 20) reveals either his youth or forgetfulness. When Margaret Thatcher became Prime Minister she sought to end the perceived unfairness in public sector pensions schemes by setting up the Scott inquiry to ascertain the facts by which such schemes could be abolished or made fairer.

On receiving the report, Mrs Thatcher was persuaded that the taxpayer derived great benefit from retaining existing schemes.

The pity subsequently has been that no government has had the courage to emulate the public service pension schemes by introducing universal pay-as-you-go schemes, which would now save the taxpayer in excess of £30 billion a year for subsidising funded pension schemes that help to bolster the shenanigans of the City.

Owen M. Jubb

Cheltenham

Sir, HBOS was nearly brought down on Wednesday by short-sellers prepared to spread false rumours in order to make a killing. Such criminal activities are only possible because institutions such as pension funds are prepared to lend part of their large holdings in companies such as HBOS to the short-sellers.

Although I fail to see how it can be in the interests of such institutions to allow the price of the shares they own to be forced down in this way by the actions of those to whom they are prepared to lend their holdings, what might help to stamp out this practice is legal liability of the lender as well as the short-seller if criminal activity on the part of the short-seller could be proven in any given case.

Michael Patterson

Swineshead, Lincs

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