Leading article: Osborne must show his hand

Share

There is widespread agreement that reform of British banking is essential and overdue and that it should start with the separation of so-called high street business from the kind of speculative, "casino" adventures that have landed them in so much trouble recently. The report by Sir John Vickers, which is published today, is welcome, therefore, in calling for the two activities to be ring-fenced from one another.

Preferably, the report would have recommended the total separation of the two activities. This is because ring-fencing still leaves open the possibility of banks stealthily dismantling the internal demarcation over time.

Given that, ring-fencing is greatly preferable to what we have now: banks so big that they know they cannot be allowed to fail lest they pull down millions of small savers with them. The current safety net that these behemoths enjoy has been a disaster for them as well as us, fostering a culture of complacency and recklessness. What it has meant in practice is that the banks reap big profits and liberally hand out bonuses when the times are good, confident that when times are bad the taxpayer will step in and bail them out. Heads they win, tails taxpayers lose.

The reaction of the Coalition Government to the report will be the key test – not in terms of whether Sir John's proposals are bathed in warm words of welcome but whether they are acted on with speed. The response of the Chancellor, George Osborne, will be crucial. He is known to be less enthusiastic about demarcation within the banks than the Business Secretary, Vince Cable.

Those who don't want real change will be careful to make the right-sounding pleasantries about the report while calling for enactment of its recommendations to be pushed back for a few years. The excuse will be that the banks need more time to adjust.

The Government should present a united front and not heed this predictable clamour from the banks and their friends. It should make it clear that the report's main proposals will be put into law within the lifetime of this parliament. Anything less than wholehearted commitment will show that the Chancellor, in particular, is not serious about banking reform.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Sustainability Manager

Competitive: The Green Recruitment Company: Job Title: Scheme Manager (BREEAM)...

Graduate Sustainability Professional

Flexible, depending on experience: The Green Recruitment Company: Job Title: T...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Project Coordinator/Order Entry, SC Clear

£100 - £110 per day: Orgtel: Project Coordinator/Order Entry Hampshire

Day In a Page

Read Next
Former N-Dubz singer Tulisa Contostavlos gives a statement outside Southwark Crown Court after her trial  

It would be wrong to compare brave Tulisa’s ordeal with phone hacking. It’s much worse than that

Matthew Norman
The Big Society Network was assessed as  

What became of Cameron's Big Society Network?

Oliver Wright
Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn