What are the dangers of renegotiating the deal?

After all the benefit that Brown and Labour has got out of the bail-out deal this morning’s Guardian front page could make uncomfortable reading and create a potentially tricky problem.

The challenge is that Lloyds TSB is lobbying for less stringent terms being imposed on it in return for the injection of tax-payer cash and in the current context that looks like a hard political sell. Under the arrangement that was hammered out over the weekend it could be five years before share-holders get paid a dividend.

Another issue is that ministers, even if they are minded to go along with the change, might find that their hands are being tied by Brussels. Apparently the ban on dividend pay-outs was insisted upon by the EU in return for getting approval under the competition rules.

A massive problem for Brown is that he was personally so closely involved with brokering the initial deal between Lloyds TSB and the troubled Edinburgh-based HBOS group. He got the kudos then and he could get the blame if things do not go through as smoothly as was anticipated.

With the Glenrothes by election only three weeks away the SNP will be looking for anything to bash Labour and Brown with.

Maybe betting on a Labour hold in the by election might not be such a good idea after all.

Mike Smithson