Leading article: Stand up to the banks, Mr Osborne

Share
Related Topics

Britain's banks could hardly be expected to accept extra regulation without a fight, least of all a package of reforms promising the biggest shake-up of the industry for decades. But the sheer volume of contact between top bank executives and the Treasury is striking nonetheless. The Chancellor must stand up for the taxpayer and resist the pressure.

Sir John Vickers, the chairman of the Independent Commission on Banking, certainly did not pull his punches. His report in September advised that banks' capital requirements be increased, that retail depositors be first in line in cases of insolvency, and – most significantly of all – that "casino" investment operations be separated from normal people's savings. All are entirely sensible measures.

But Sir John himself warned soon after his proposals were published that intensive bank lobbying was threatening to "emasculate" them. And worrying subsequent reports have suggested that the Government might take a selective approach, easing back on capital requirements, for example. There can be no justification for such changes, not least with the timetable for implementation now stretched out as far as 2019.

The banks do have superficially strong arguments. They claim that it could cost up to £7bn to put the new rules into practice; that raising the cost of banking will damage Britain's already-ailing economy; that, ultimately, uncompetitive regulation will force them overseas, taking their considerable tax bills with them. Perhaps. But it is far less straightforward, or desirable, to relocate than such easy threats suggest. And financial services can hardly be deemed affordable when they come at the price of bailing out the entire system.

Britain's banking industry is broken, as the £850bn-plus taxpayer-funded rescue in 2008 amply proves. Ostensibly, George Osborne grasps the point. When Sir John's proposals were published, the Chancellor welcomed them as "a job well done". But his formal response on Monday must follow up the warm words with decisive action – regardless of what the banks have been telling the Treasury since. Half-measures will not do.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Account Manager

£23000 - £25000 per annum: Recruitment Genius: This company has over 40 years ...

Recruitment Genius: Weekend Factory Operatives

£9 per hour: Recruitment Genius: This high quality thread manufacturer is curr...

Recruitment Genius: FP&A Analyst

£40000 - £55000 per annum: Recruitment Genius: A market leading acquirer and m...

Recruitment Genius: Electricians

£35000 - £45000 per annum: Recruitment Genius: Fully qualified electricians re...

Day In a Page

Read Next
 

Daily catch-up: the Labour leadership election hasn’t yet got to grips with why the party lost

John Rentoul
Kennedy campaign for the Lib Dems earlier this year in Bearsden  

Charles Kennedy: A brilliant man whose talents were badly needed

Baroness Williams
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific