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The government has announced a package of measures aimed at rescuing the banking system that makes available some £400bn.

Initially, the extra capital will be available to eight of the UK's largest banks and building societies in return for preference shares in them. Preference shares pay a fixed rate of interest instead of a dividend, which has to be paid before other shareholders receive anything, but they do not carry voting rights.

Taxpayers may end up making a profit from this type of shareholding, but that is by no means guaranteed. However, this rescue plan will not give the banks a licence to trade as normal. Negotiations will take place with each participating institution that will require them to extend normal credit lines to homeowners and small businesses, in addition to rules on executive pay and dividends to other shareholders. Taxpayers will hope that there is some scope for profit in the long term from this plan, which will potentitally cost over £1,600 per head.

This time last year the Chancellor announced the date of the Pre-budget report. This year he may wait to see if the current crisis calms down before committing himself to a date and announcing his spending plans for the next year.