UK Age

Cinema's gift to future generations will be the indelible stories it has to tell about today

The moment of memorable emotion at the Oscars does not arrive when Kate starts gasping or Danny goes hip-hopping. It comes, predictably, as Hollywood bids goodbye to those it has ostensibly loved. So farewell Van Johnson, Richard Widmark, Sydney Pollack, Paul Scofield and - with a special lump in most throats - Paul Newman. And there, flashing briefly across a huge screen, is a smiling close-up of Newman himself, signing off with a laid-back salute.

See you in movie heaven sooner or (in his case) 81 big picture roles later. He was Plato in the Death of Socrates 56 years ago, before playing some ordinary Joe in the Joe Palooka Story. He made film after film that helped define the five decades which followed: Cool Hand Luke, Fast Eddie, Butch Cassidy, Judge Roy Bean. He was simply part of popular culture's landscape.

Now, though dead, he is also curiously alive. The face, laconic, unlined, will never wither. The body of work is permanent, as perfect as the moment he finished filming. Is there such a thing as the Hollywood community? Perhaps, at moments like this, when the elders of the industry pass over to the other side, committed to everlasting life in the cans of eternity. You glance round the audience as cameras pan. Whoever reckoned on poor Heath Ledger?

I came out of Gran Torino the other night in melancholy mood. Maybe the plotting is clunky and "redemption" comes bathed in neon lights. Nevertheless, it is an experience you cannot shrug away: more than just Clint Eastwood's 66th performance (from Revenge of the Creature to iconic fame). You do not, I guess, want to know the ending; but it seems to signal the end of an on-screen career too. It is a way of saying goodbye before those Oscar obituaries roll. And it defines what makes film unique.

Half a century ago, as Eastwood played a TV cowboy in Rawhide, it became accepted wisdom that Hollywood was doomed. Who would want to pay to go to the movies when slumping at home in front of the box cost nothing? Cathode-ray tube would oust silver screen just as surely as, today, it is assumed that another kind of screen will kill words on paper. But discard such doom-fraught assumptions. Gran Torino is already $100m in the black. Clint, at 78, is as bankable as ever. Cinema admissions - in the midst of the crunch are up, not slithering down. And it is television, the new whiz-kid on the block, that is gasping for air.

Why? How on earth have Hollywood (and Bollywood) knocked all their supposedly unstoppable competitors flat? How do they keep the average age of their audiences in the 20s - and sprout dynamic offshoots of industry from Iran to Argentina? Go back to the Oscars last week, with a detour to brood over the death of Wendy Richard.

Many of those who remembered Are You Being Served? remembered the young, bouncy Wendy with affection. (One of them wrote a letter to the Guardian on Saturday from Dallas saying just that.) Others suffered with her through the long tribulations of EastEnders. She was a presence in millions of lives. But Eastwood and Newman, in a timeless way, are still able to define the lives they touch because the films they appeared in never grow fusty with the blur of old TV technology: and, in that sense, they will never die.

The wonder of film is that it can always be fresh - screens peopled by actors, such as Paul Scofield, whose men for all seasons on the stage have faded irrevocably. The wonder of film, mined by celebrity magazines, is that it offers us time in a parallel world.

Wandering round the British Museum's Babylon exhibition the other day, seeing pictures of US marines camped on the site of the old city, I thought of Hollywood some 2,500 future years down the track. Another Tower of Babel lost from sight, maybe, but also a tower of dreams that will never quite disappear. With luck, and a bit more technology, anyone who wants to know a little about the preoccupations of Planet Earth 2009 will be able to head for a darkened room and see what became of the Gran Torino. They will reconstruct their own Hollywood Babylon.

Which is one odd - no, amazing - reason why the most supposedly vulnerable mass medium of all, the one you have to go out in the rain and pay for on chill winter nights, is not vulnerable at all. Forget Gordon Brown: think Clint.

Labour must make clear that they, not the Tories, are the genuine party for equality in education

Today, local councils will send out offers of places to all children about to enter secondary school in England. With reports of increasing numbers of parents failing to get their first choice of schools, and pressure on the state from recession-hit parents deserting private education, National Offers Day - as it has come to be known - is likely once again to bring simmering conflcts within our deeply divided school system to the surface.

With an election looming, the debate will be particularly sharp this year. In recent weeks, David Cameron and his education spokesman Michael Gove have been laying out their education plans, while revealing details of their shared school run to an exclusive faith state primary in west London.

On the surface at least, the Tory plans are bold: a razzmatazz mix of social justice pledges furthered by market means, all leavened with a large dose of old-style learning: blazers, ties, firm discipline and a traditional curriculum. And Swedish-style plans to deliver up to 200,000 new places in a raft of completely new schools. Going one step further than New Labour's academies, these would be privately run, independent of local authority control, but paid for by the taxpayer. Funds would follow individual pupils, with extra money for the most disadvantaged.

Critics argue that the Tory plans are not fully thought through nor properly costed and could lead to havoc, with core funding diverted from state schools - on top of what looks like inevitable cuts in public spending.

In Sweden, the open enrolment system that Cameron at first promised to run here has led to the notorious "pizza queues" - long lines of parents, or their au pairs, eating takeaways, while waiting to put a child's name down at a desired school. The Tories have had to row back from this idea on the grounds that such a system would inevitably benefit the better off - those who possess faster broadband, sharper elbows, and au pairs to do their waiting for them.

Perhaps the most significant aspect of Tory plans is their unreserved commitment to the non-selective, all-ability model, otherwise known as the comprehensive school. In one recent agenda-setting interview, Cameron and Gove pledged a "super comp" in every area.

No idea has been more attacked over the last half century. Yet all parties embrace the comprehensive ideal on the now well-established grounds that academic selection clearly entrenches class privilege and so hinders genuine social mobility.

Incredibly, however, neither Tory nor Labour have any plans to end the selection that still deforms our system. Cameron has nothing but warm praise for the private sector that selects not just on so-called academic ability but on private wealth. And none of the parties has plans to phase out the remaining 164 grammar schools. In counties such as Kent and Buckinghamshire, the continued existence of the 11-plus means that thousands of children start their secondary school life officially branded as second rate.

But the government's real difficulty lies in its recent attempts to manage a covert retreat from the more radical elements of the former education minister Lord Adonis's agenda. Two current consultation papers, The 21st Century School and the School Report Card, are low-key attempts to put more emphasis on personalised education - to replace competition with collaboration between schools, and to reform the high stakes and highly unpopular league tables. A newly strengthened admissions code should ensure a fairer distribution of school places today.

It is well known that Gordon Brown and schools minister Ed Balls are less enthusiastic about the academy programme than their predecessors. But if they continue to keep their concerns quiet, how can they argue with an opposition that seems to have taken up the idea of freeing schools from local control?

Genuine fairness between schools necessitates local regulation in three key areas: admissions, exclusions and special needs. Get that framework right and then why not grant teachers in every school - not just the academies - greater professional autonomy and the opportunity to innovate in teaching and testing?

The government must also be willing to admit its mistakes, such as the naming and shaming of failing schools - many of them in selective areas, already crippled by the existence of grammars - without then granting them sufficient resources to improve. And why not outmanoeuvre the Tories on the "super comp" front by promising to gently phase out the 11-plus and other forms of selection?

Above all, the government needs to remind the electorate of the blindingly obvious: that the Tories have contributed little to the advancement of state education or educational equality. The opposition may have opportunistically donned the cape of comprehensive crusader for the moment but it is Labour that has put in the hard slog, and money, over the years. There is much done, if much still to be done.

With indulgence under siege from the forces of economic darkness, it fell to Miuccia Prada to bring some wartime spirit to Milan's fashion week.

Last season, Prada showed off the flimsiest of fabrics, boudoir-crumpled and cut lingerie-bare to expose the midriff, while their shoes were so impractically high many models collapsed before the show's end.

Last night, the models were like modern-day Land Girls, wearing serviceable woollen skirt suits worn over sturdy, knitted undergarments and cinched with plain brown leather belts. The look was finished with wellies or waders, and hair that suggested a night in a sleeping bag rather than an hour between silk sheets. The utilitarian Prada look featured capacious, practical leather bags, modelled by the designer on the style of those carried by her grandfather in the 1940s.

In direct contrast to recent clutch bags, designed to hold little but lipstick and trinkets, the bags were businesslike in size and style. But the rubber-soled shoes and thick, tweedy fabrics belied any suggestion of power dressing.

It was a collection "for the outside, for the countryside: for being in the fresh air, not being in a nightclub", said Miuccia Prada backstage.

The return of the skirt suit was, said Prada, a "more serious" direction for the label. "Skirt suits look new in fashion, but really women always wear suits," commented the designer.

In Italy, fashion has been reeling since Thursday, first day of the shows, when IT Holding SpA (owner of brands including Gianfranco Ferre, Malo and Exte) filed for bankruptcy. But there was a fillip for the industry yesterday when Matteo Marzotto, former president of the Valentino label, said that he had bought the historic French fashion house Vionnet, founded in 1912, and appointed Rodolfo Paglialunga, former designer at Prada, to create the first collection to be shown in June.

• Wealthiest are most sceptical, poll suggests
• Nearly 60% say education standards are worsening

Labour has failed to convince voters that its drive to improve education has led to a fairer schools system, according to a Guardian/ICM poll published today. Nearly half of people do not think children have an equal chance of getting into a good school and nearly 60% believe school standards are falling.

Families will learn this week which secondary schools their children have secured places at for September, but today's poll reveals that 44% of people with school-age children do not believe that pupils get a fair chance in the admissions system.

People from the wealthiest backgrounds are most sceptical. About 50% of those in managerial or professional jobs say most children do not have a fair chance of getting into a good school. This compares with 38% of those in manual jobs thinking similarly. One in four adults would also like to see private schools scrapped.

The schools secretary, Ed Balls, yesterday sought to alleviate concerns about admissions with the announcement of a review of two of the most controversial parts of the system: the use of lotteries to allocate places, and when twins are separated to attend different schools.

About 45% of 1,000 adults polled last weekend disagreed with the statement "all but a few children have a fair chance of getting into a good school". Conservative voters are most likely to believe the system is stacked against them, and people in the south of England are least likely to think the school system fair.

One in four people believe private schools should be abolished, rising to a third of Labour voters. About 19% of people from the wealthiest backgrounds want abolition, compared with 32% of people from poorer homes. Fifty-eight per cent of people agreed with the statement "standards in state schools are getting worse". Asked about faith schools, 60% said they thought children benefited from a faith-based education, while 69% of those with school-age children supported a religious ethos at school. The poll comes at the height of parental anxiety over school allocation. Local authorities will today write to every parent of an 11-year-old in England informing them of the secondary school allotted to them.

Another Guardian survey of all local authorities to establish the scale of competition for places this year reveals that a demographic reduction in the number in 11-year-olds is easing pressure in the system. Of 72 authorities which responded, the majority reported that applications had decreased, making it more likely that the proportion who will get their first choice of school will rise nationally.

About 20 authorities said applications had increased, while the rest reported decreases or the number staying the same. But there is pressure in areas with grammar schools and those where a lot of people have gone to private schools, suggesting families are making "insurance" applications to state schools if they cannot afford private education in September.

ICM interviewed a random sample of 1,004 adults aged 18+ by phone between 20 and 22 February 2009. Interviews were conducted across the country and the results have been weighted to the profile of all adults.

London should have similar arrangement to tackling extreme weather as those in place to tackle terrorism to prevent a repeat of the travel chaos caused by last month's heavy snow, a report said today.

The London assembly said command centres should be set up by Transport for London (TfL) and the city's councils to avoid a repeat of the buck-passing and poor co-ordination that hindered efforts to deal with February's snowfall.

A report by the assembly's transport committee, published today, said disputes and confusion among TfL and the London boroughs meant the capital was ill-prepared to deal with the snow, despite forecasts warning of its severity.

Valerie Shawcross, the Labour chairwoman of the London assembly transport committee, said: "The heavy snow was unusual, but not unforeseen. While some disruption was inevitable, the evidence we heard suggests a lack of preparation and co-ordination delayed the capital's recovery. TfL and the boroughs need to have arrangements similar to those for a terrorist attack.

"There should be one person at TfL and another representing all the London boroughs to take responsibility for dealing with this kind of event, which is less than a life-threatening terrorist incident but still extremely disruptive." Despite forecasts that the capital faced its worst snowfall for decades, many routes to vital infrastructure, including ambulance depots and bus garages, were blocked due to confusion and disputes as to whom was responsible for gritting and clearing roads, the transport committee found.

The travel chaos on the first two days of February led to more than 300 planned operations and around 5,000 appointments being cancelled at Guy's and St Thomas' hospitals alone. Across London, ambulances were unable to park near patients' homes because most roads were not gritted, meaning crews had to carry equipment considerable distances. Shawcross was scathing of the London mayor's handling of the situation.

She said: "My personal view was that the mayor was almost totally absent from any involvement in the crisis and didn't seem to show any concern either before or after."

Local councils criticised TfL for being "poorly prepared", complaining it had not contacted them about dealing with the bad weather and they had to rely on its website for travel information.

The report noted that the boroughs admitted failing to work with neighbouring councils, which contributed to the delays to clear roads.

Offshore havens that refuse to hand over information on tax dodgers face an unprecedented campaign of economic sanctions by the world's most powerful countries, which may be agreed at the G20 summit in London next month.

The campaign could see Britain targeting some of its own overseas territories including the Cayman Islands and the British Virgin Islands, where British banks and corporations use scores of subsidiaries to avoid tax.

The blacklisting threat comes as opposition politicians in Britain call for a review of the tax haven dealings by banks being bailed out by the British taxpayer.

Lord Oakeshott, Lib-Dem Treasury spokesman demanded at the weekend that ministers disclose how much banks' offshore activities were costing. "The government should not put a penny more into these banks before they stop biting the hand that feeds them," he said.

The Tory shadow chancellor, George Osborne, made a statement saying: "While Gordon Brown claims he will deal with offshore tax avoidance, he is increasing the government's stake in banks that, like RBS, have offshore subsidiaries".

The Guardian disclosed in its recent Tax Gap series, that Lloyds was "making loans subsidised by the British exchequer", according to revenue allegations in a current tax avoidance tribunal case over transactions with US insurance giant AIG and Bank of America involving hundreds of millions of pounds. The bank continues to refuse to explain the purpose of other large loans, totalling £4bn, many routed through the Caymans. It claims all its tax-linked activities are legitimate.

Following the G20 preparatory summit in Berlin last week, officials are preparing a new blacklist of uncooperative havens. Other leading centres of secretive offshore activity including Liechtenstein and Panama are among more than 30 nations that have failed to sign agreements to hand over information about corporations and individuals who take advantage of their secrecy and their low taxes.

Earlier lists which were prepared by the OECD, merely "named and shamed". Now, the G20 nations plan to promote a series of sanctions which are designed to deprive them of billions of dollars of business.

Sanctions discussed include refusing to allow payments to a blacklisted haven to be deducted from taxable income. This would hit big corporations and banks who channel millions of pounds out of the taxman's reach by paying royalties, management fees, dividends and insurance premiums to their own offshore subsidiaries.

Officials are working on a plan for international financial institutions to pull their investments out of the blacklisted havens. Brown is due in Washington on Tuesday for talks with President Barack Obama.

The G20 is believed to be drawing up its blacklist from three overlapping groups of havens: those which still have no double taxation conventions, which allow nations to swap information on taxpayers in each other's jurisdiction; those which have refused to accept the idea of new Tax Information Exchange Agreements (TIEAs), which allow one nation to require another to dig out extra information on a suspect; and those which agreed in principle to TIEAs but have failed to sign them.

Commander claims defeat of al-Qaida and dawn of democracy

The general who has spearheaded Britain's two longest and most controversial wars of the past 60 years claims today the army will leave Iraq with al-Qaida largely defeated and the roots of democracy firmly planted.

Lieutenant-General John Cooper, who stands down tomorrow as deputy commanding general in Iraq and also retires from the army after more than 30 years, said Basra, which the British will leave by early summer, is back on its feet and buttressed from any militia resurgence.

Cooper believes January's nationwide provincial elections were a turning point and said Iraq would be handed over in better shape than when Britain invaded six years ago.

His optimism echoed predictions made after provincial elections in early 2005, which instead heralded escalating violence. But this time, he said, shifts in attitude throughout Iraqi society, as well as improved security, would prevent another slide towards anarchy.

"We have got democracy rooted here," Cooper said in his final interview before leaving Iraq. "Clearly there is a long way to go to develop things. The provincial elections show that Iraqis have an appetite for it. They were free fair and credible and that reflects a desire for change."

Cooper was second in command only to US generals David Petraeus and Raymond Odierno. All three were responsible for the 150,000 coalition troops in Iraq.

His upbeat assessment comes weeks before the final tranche of British troops begins to withdraw from Iraq and is bound to renew controversy over the role Britain played in the invasion and its aftermath.

Tens of thousands of Iraqi civilians have been killed during the insurgency. The number of British soldiers killed stands at 179, hundreds more have been maimed.

The infrastructure of the country has, in places, been decimated.

American generals have said al-Qaida was strategically defeated in Iraq following the troop surge of late 2007.

Cooper would not go that far, but said: "Al-Qaida had been here in significant numbers and hopefully their aims and objectives have been denied to them. The lesson that I draw from this is that an organisation like al-Qaida that purports to represent the people and then targets them will never take the people with them. They have suffered significant reverses and their ability to operate and target civilians has been diminished.

"Their organisational ability has been greatly reduced. Their ability to communicate through the internet has been taken from them and so has their ability to finance themselves. Effectively the size of their networks has been much reduced.

"The surge was very important. Surges work. We saw that in Northern Ireland in 1972 and with the way the Awakening removed support for al-Qaida. If you have the people's support, you will win." The Awakening councils or Sahwa were groups drawn from Sunni Arab tribes that began allying themselves with the coalition in 2005 to fight al-Qaida.

Despite the general's comments Basra remains impoverished and in desperate need of essential services, but Cooper believes an occupying army's main task should be to set the conditions for changes to society. "They [the Iraqis] have a writ of national government, the growth of the internal security services. (In addition) they have a well-defined legal system, a well-defined and understood legislative system and security structures that have grown," he said. "We have done that by establishing democracy in the Middle East. Diplomatic missions are beginning and Iraq is again a member of the community of nations.

"British forces will leave southern Iraq in a better position. People have made sacrifices. Quite often the ultimate sacrifice. Soldiers understand what they are doing here and why. You don't get a decent account of history until everyone involved is dead. But in time I think people will say we played a strong role in the south."

British forces will begin to draw down from the middle of this month, with all but 400 soldiers, sailors and contractors remaining. They will mainly be responsible for training Iraqi army and navy officers.

Cooper arrived in Iraq in early 2005 as a major-general fresh from acting as a deputy theatre commander in Afghanistan, where the insurgency had then largely been stabilised. He led the 1st Armoured Division in Iraq into what was then a rapidly spreading anti-coalition insurgency and sectarian war.

He leaves the country with currents moving in the opposite direction: Iraq is consolidating its security gains and the insurgency is intensifying in Afghanistan.

"What emerged in Iraq was insurgency on a grand scale. What is different [in Iraq] in 2009?" he asked.

"The conditions. In 2003 the lid came off from 30 years or more of sadistic oppression and the passions of everyone involved had been let out. It took time for the Sunnis to realise they should be inside the political process. It took time for the Shia militias to do the same and it took time for the government to build capacity. By 2008 the time was right for this to happen."

But when the British army leaves its fortified base at Basra airport, nine miles (15km) north of the city, American military units will replace them, a fact which opens the door for criticism that the British mission is far less accomplished than claimed by both Westminster and Whitehall.

"The Americans are going to be doing something different," Cooper said from his office in the US Embassy in Baghdad. "Our principal task was to train up 13 divisions of the Iraqi army. We have done that. And we also aimed to get conditions right for the development of other non-military activities. The Americans will have fewer troops. They themselves will be drawing down. They are not duplicating what we have done."

Iraqi officials in Basra say that over the past six months the Americans had already taken a lead in securing the city. Britain maintains 18 joint outposts with the Iraqi army throughout Basra province, but its units are rarely seen on the streets of towns and cities.

British forces have been criticised by some quarters in Iraq for rarely leaving the Basra base since late-2007.

As the war has become increasingly unpopular among the British public the government has been accused of going to extreme lengths to minimise casualties on one front, while the war in Afghanistan is claiming the lives of an increasing number of servicemen and women.

Britain's Challenger tanks have not left the Basra base in the past eight months and combat operations have been reduced to the contribution of the SAS in and around Baghdad.

Barack Obama announced last Friday that all American combat troops would be out of Iraq by 2010, a year earlier than previously foreshadowed.

British forces withdrew from Basra city to the airbase in September 2007 after safe passage was negotiated with the Mahdi army, the Shia militia whom they had fought throughout southern Iraq in the three years before. They supported the Iraqi army last March as it drove the Mahdi army out of Basra in an operation that ushered in relative safety to the city.

At the time Cooper had just arrived back in Iraq after two years and was not told in advance of the operation. Some British-trained Iraqi forces abandoned their posts and vehicles during the operation which was called Charge of the Knights.

But Cooper insists Iraqi capabilities have grown markedly.

"The government has made it clear that in a democracy the only force that can exist is a government," he said.

"The south had seen a militia dominating their lives, which in the end they rejected. They have assessed that it is better for them for now to be involved in the political process."

• Belief map shows support for Darwin's theories
• God and evolution can be compatible, says thinktank

The east of England may be the most godless region of the UK, according to a "belief map" published by a theology thinktank today. Almost half of adults there believe the theory of evolution makes God obsolete, and more than 80% disagree with creationism and intelligent design, which propose that humans were created by God in the past 10,000 years, and that life owes its complexity to divine intervention.

The map was drawn up by the thinktank Theos following a survey of 2,060 people across the country who were chosen to be representative of the adult population.

The survey, which was conducted to mark the 200th anniversary of Charles Darwin's birth, found that nearly half of the British adult population could not name the country's greatest naturalist as the author of On the Origin of Species, the 1859 book that introduced evolution through natural selection to a sceptical Victorian society.

The poll also revealed some extraordinary views on more recent writings, with 5% of adults thinking Darwin wrote A Brief History of Time, a bestseller on the science of spacetime, which was written by the Cambridge physicist Stephen Hawking and is widely regarded as the most popular science book never to be completed by its readers.

A further 3% of those surveyed thought Darwin wrote The God Delusion, by the arch-atheist and Oxford biologist Richard Dawkins, while 1% thought Darwin was the author of The Naked Chef by Jamie Oliver.

The study found only 15% of people knew that Darwin was a self-described agnostic towards the end of his life, with a fifth believing he was an atheist. Nearly half thought evolution challenged Christianity but said it was possible to believe in both.

The survey suggests there is a widespread lack of religious sentiment across Britain. National average figures revealed that less than a third of adults see evolution as part of God's plan, 89% dismiss intelligent design and 83% reject creationism as plausible explanations for the existence of human life.

The survey reveals a relatively high proportion of people in London who believe in creationism. "Whereas the national average is 17% who believe that human beings were created by God in the last 10,000 years ... in London, that figure is 20%. That may well be due to the growth of Pentecostal churches in London, which are growing at an extraordinary rate," said Paul Woolley, director of Theos.

According to the survey, Northern Ireland has the highest proportion of people who believe in intelligent design (16%) and creationism (25%).

"The research clearly indicates there is a great deal of confusion about what people believe and why they believe it," said Woolley.

"There are two lessons in particular that we can learn from Darwin. The first is that belief in God and evolution are compatible. Secondly, in a time when debates about evolution and religious belief can be aggressive and polarised, Charles Darwin remains an example of how to disagree without being disagreeable," he added.

HSBC is expected to demonstrate the severity of the economic downturn tomorrow by embarking upon a £12bn cash call and slashing its dividend to bolster capital being eaten away by its troubled US operations.

Until now, HSBC had been able to claim to be one of the few major banks in Europe not to have needed to raise fresh funds or turn to the government for handouts. But the woes at its Household business in the US – which is expected to be closed to new business – and the general economic slowdown is thought to have driven the bank to increase its capital cushions before the situation worsens further.

Its £12bn rights issue – which could rise to £13bn – would certainly be the largest undertaken without the taxpayer's help since Royal Bank of Scotland tapped its shareholders last April and could possibly be the biggest on record.

The fundraising is expected to be announced along with its 2008 profits, which are forecast to be as high as £12.6bn before the impact of the goodwill write­downs associated with the acquisition of Household in 2002. HSBC had been carrying £7.4bn of goodwill for Household and has already written off £350m to reflect the falling value of the business. Analysts now believe the remainder could also be written off while the bank's provision for bad and doubtful debts could rise to more than £14bn.

Michael Geoghegan, HSBC's chief executive, took personal responsibility for the bank's growing problems with US mortgages when HSBC issued its first ever profits warning in February 2007. He is now expected to forfeit any right to a cash bonus for 2008, along with most of his boardroom colleagues.

Even without the rights issue, HSBC would be one of the world's strongest banks and the extra funds will bolster its capital cushion still further to an estimated 9.5%. Unlike those banks that have run into difficulty because they rely on the wholesale markets to finance their operations, HSBC has enough deposits to cover its loans.

The rights issue is being underwritten by Goldman Sachs and JP Morgan Caze­nove and is expected to be at a 40% discount to the prevailing share price. The banks are thought to have sounded out institutional investors at the end of last week and over the weekend about their ability to support a record-breaking fund­raising. The underwriters will be hoping that investors do not drive HSBC's shares below the rights issue price as that would leave with them with millions of shares – as happened with HBOS's summer rights issue. Since then RBS and HBOS have raised even more capital but only in government-backed deals that left the taxpayer with stakes in the banks.

HSBC's management, led by chairman Stephen Green, hopes to fend off criticism from Knight Vinke, the activist investor which has been calling for radical action over Household. Green and Geoghegan are expected to point out that they will be raising fresh capital without taxpayer support and therefore remain unconstrained by rules on bonuses and lending.

Even so, it is thought that HSBC is aiming to revamp its pay and bonus policies in its annual report which will be published tomorrow with the financial results. Bonuses are thought to be down across the board, with the possible exception of Hong Kong, where the economic conditions have not deteriorated with the speed they have in the US and western Europe. Paul Thurston, managing director of HSBC UK, told the Treasury select committee last month that the bank was in the process of a "critical review" of bonuses.

While HSBC is expected to cut its dividend – perhaps by as much as 50% – it will be one of the few London-listed banks to make a payment for 2008 after RBS, HBOS, Lloyds TSB and Barclays all stopped their payouts to shareholders.

HSBC is thought to be planning a conventional fundraising via a rights issue to avoid the controversy encountered by Barclays when it raised fresh funds from investors in the Middle East last year. HSBC should also benefit from the accelerated timetable for rights issues after the failure by HBOS to attract support for its fundraising last year. A rights issue gives existing investors the first chance to subscribe to new shares to prevent their influence over the company being diluted.

The fundraising appears likely to cost Geoghegan his bonus – he received £1.9m in 2007. Green and finance director Douglas Flint are also thought unlikely to take theirs. Green received £1.7m in 2007 while Flint, who has played a crucial role in trying to turn the US business around, was awarded £800,000 in cash. It is thought bonuses across the bank will be down by about a third.

Until the acquisition of Household six years ago, HSBC had a small US presence and had been keen to expand outside its traditional heartland in the emerging markets of Asia. However, Knight Vinke and others criticised the expansion and urged HBSC to pull out of the troubled deal.

The bank's UK operation is expected to show a large increase in its mortgage market share after introducing some competitive deals last year at a time when traditional players were forced to pull back.

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