David Prosser: Bashing the banks all over again
Wednesday 24 March 2010
Outlook When the public finances are as shaky as they are now, a Chancellor looking for Budget giveaways has to think laterally. So you can see why Alistair Darling may be tempted to say today – as reports suggest he will – that banks are to be legally required to offer a current account to anyone who asks for one. It would cost the Treasury not a penny and has all the appearances of an attack on greedy, selfish banks that aren't interested in doing business with the less well-off in society.
There's just one problem with that analysis. The larger banks are already legally required to offer a basic account – which is all the Chancellor is talking about – to almost everyone who asks. There are but two exceptions. A bank can say no to such a request if you're an undischarged bankrupt (though several institutions are prepared to accept such people as customers) or if you're a convicted fraudster.
It seems unlikely that Mr Darling is planning to order the banks to waive those rules. What's more credible is that this is an announcement that suits the Chancellor because it's free and deliverable (in the sense that it is already being delivered). It's the sort of trick for which the Prime Minister was renowned in his days at No 11.
None of which is to say that it is wrong to make it a priority to get as many of the 1.75 million people without a bank account currently on to the books of the banks as quickly as possible.
In fact, the Government, together with the banking industry, already has a good story to tell on this issue, having halved the number of people without bank accounts in the past five years – and at current rates, the number will halve again in the next five years.
That's important. Not having a bank account is a significant contributory factor in social and financial inequality. It is, for example, one of the basic checks made by credit ratings agencies when they assess applications for anything involving an element of credit. That doesn't have to mean a debt-inflating credit card – it might just be an application to spread the cost of house insurance over a year.
Nor do those without bank accounts have access to the best deals from the big utility companies. Gas and energy suppliers offer cheaper prices to customers who pay their bills by direct debit – so do many phone companies. The bankless therefore pay more for the most basic services.
In other words, the Chancellor is quite right to insist that the banks keep up the good work on tackling financial exclusion. But to pretend this is somehow a new strategy – let alone another payback for the banking crisis on behalf of taxpayers – would be dishonest.
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