Ed Miliband sets out bank reform plans
Labour leader Ed Miliband today accused the Government of “failing to rise to the challenge of reforming our banks”, as he set out a blueprint for change, including forcing the “big five” to sell up to 1,000 more branches to increase competition.
Mr Miliband pointed to the Libor rate-fixing scandal, the mis-selling of complex insurance products, the failure to lend to business and the "fleecing" of customers with payment protection insurance as proof that the banking industry has become "economically damaging and socially destructive".
And he called for institutional reform and cultural change to bring about a return to the "stewardship banking" of the past, after 20 years or more in which the banks have behaved like casinos.
Mr Miliband detailed his proposals in a speech to the Co-operative Bank, which is in exclusive talks with Lloyds Banking Group to buy more than 600 of its branches.
And he said that he wants at least one other privately-run "challenger" bank to be given the chance to break into a market dominated by the five best-known names.
Other elements of the shake-up include a code of conduct with a power to permanently "strike off" errant bankers and a specialist banking unit set up with the Serious Fraud Office.
Amid continued controversy over a potential multimillion-pound payoff for ex-Barclays boss Bob Diamond, he also backed EU proposals - opposed by Chancellor George Osborne - to set a maximum 1:1 ratio of bonus to pay.
And he published a report on Labour's case for a British Investment Bank to help the business sector which was "having to compete with one hand tied behind its back" because of the lack of available credit.
"Nobody can really believe that the current way of running things is in the interests of British business. The revelations of the last two weeks have shown precisely what has gone wrong in our economy in the last decades," declared Mr Miliband.
"The rules of our economy were too frequently based on the idea that if government got out of the way and we followed the path of deregulation, we would create an economy that worked for all working people.
"In too many ways and in too many places, it hasn't worked. And the test for all of us is whether we can learn that lesson. And that starts with our banks."
Mr Miliband admitted that Labour had failed to be tough enough in regulating the banks while in power.
But he added: "The difference between us and the Tories is this: We have learned the lessons.
"The Conservative-led Government won't bring the change we need. They have failed to rise to the challenge of reforming our banks again and again.
"Watering down the separation between high-street banking and casino banking. Going slow on new competition in banking. George Osborne heading to Europe this week to argue against action on bonuses.
"Refusing a bank bonus tax. And a judge-led inquiry. Once again showing they are out of touch with where the public are.
"And most of all, they can't be the people who deliver tougher regulation because light-touch regulation is what they believe in their bones."
Mr Miliband said the banking scandal had vindicated his warnings at last September's Labour conference about "predatory" capitalism.
"Last September I said to the Labour Party conference that Britain needed a different kind of economy," he said.
"An economy based not on the short-term, fast buck, take-what-you-can. But on long-termism, patient investment, and responsibility shared by all.
"Not an economy based on predatory behaviour, but productive behaviour. Not an economy that works just for a powerful, privileged few, but an economy that works for all working people."
Today, he said his proposals would pave the way "from the casino banking we have to the stewardship banking we need".
"It will mean root and branch change for our banks if we are to deliver real change for Britain, if we are to rebuild our economy so it works for working people, and if we are to restore trust in a sector of our economy worth billions of pounds and hundreds of thousands of jobs to our country," said Mr Miliband
The new standards watchdog would be able to tell someone they could "never again work for a bank in this country", he said - with the new crime unit ensuring "our country is no longer a soft touch for white-collar crime".
"And we would tackle the bonus culture, including supporting the international action that the Government opposes, to bring rewards into line with performance," he added.
"We would introduce far greater transparency in the way that banks serve all our communities and examine ways of creating new institutions, including a British Investment Bank, to help release the loans small businesses need to grow."
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