Brown seeks full inquiry into banks

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Indy Politics
A WIDE-RANGING inquiry into the banks was called for by Gordon Brown, the shadow Chancellor, yesterday as he claimed that 'vested interests closely tied to the Conservative party' were holding the country to ransom.

Millions were having to pay more than they needed to for banking, food, and the whole range of essential services from the privatised utilities, he said - and the Government would not act because of the number of Conservative MPs and former ministers on their boards or acting as advisers and consultants.

Mr Brown's assault on vested interests is an extension of John Smith's speech painting Labour on the side of the individual. Mr Brown said customers were paying 50 per cent more in bank charges - an extra pounds 2bn - than before the recession. They had paid for 'the banking mistakes of the '80s' while bank dividends had risen by 80 per cent and boardroom pay by 60 per cent in the same period.

The 'unaccountable power and decisions of the banking establishment have damaged family finances for millions of people and are holding British business back', he said.

Many credit card holders were paying 20 per cent above base rates while 30 per cent of small businesses had not seen the full benefit of interest rate reductions.

The privatised electricity and gas industries and British Telecom were enjoying rates of return two and even three times higher than Japan, America and Germany - with profits up 70 per cent during the recession - when their monopoly position suggested that a lower rate of return was reasonable. But the Conservatives, he said, 'will not act' because they are too close to the boardrooms.

'Much of the Tory party in the Commons and Lords - even in the Cabinet - comes from the banks, is of the banks and may be soon on its way back to the banks.' Three of the big clearing banks had eight leading Tories on the board, he said, while 13 MPs held personal directorships or consultancies with them.

Sixteen ministers and MPs had directorships or consultancies linked to the utilities - and Peter Walker, Norman Tebbit, Sir Norman Fowler and Lord Young had all moved to the boards of businesses they had privatised or regulated, Mr Brown said. 'The utilities it seems, were created by the Tories to be run by the Tories.'

Consumers were paying far more for basic foods than necessary as a result of the Common Agricultural Policy and the 'unholly alliance' between farming and food interests and the Ministry of Agriculture. Twenty- five Tory MPs had farming interests, he said.

Speaking at a meeting of Labour's backbench Treasury committee, he said: 'Almost 14 years of Conservative government has brought dearer food, dearer water, dearer energy, dearer telecommunications and dearer money than we should have.'

A banking inquiry should examine legally enforceable customer contracts, a statutory ombudsman to ensure redress, 'league tables' for service to customers, the arguments over long-term industrial investment, and the case for extended competition.

The utilities should be subject to a Freedom of Information Act, ombudsmen and legally enforceable consumer rights. They should face public hearings before a Commons committee before raising prices.

Labour's 'historic mission' was to stand up to any cartel, clique or vested interest abusing power, Mr Brown said.