Labour conference: Miliband threat to break up banks

 

Ed Miliband: "Either they sort it out for themselves... or Labour will, by law, split those banks up"

Labour leader Ed Miliband has said that if banks do not separate their retail and investment arms, a future Labour government will "break them up".

There needs to be a return to the "best traditions of British banking", Mr Miliband said, where "banks serve the customer" not international markets.

Recommended ring-fencing of retail from investment banking had been watered down by the government, he said.

The Treasury said it was "undertaking radical reform" of the banking system.

The Vickers report into banking, launched in the wake of the financial crisis, last year recommended banks split into two parts to separate the High Street side from the riskier investment side and cut their reliance on borrowed money.

The coalition has already said that all of Sir John Vickers' recommendations will be implemented by 2019.

But if Labour won the 2015 general election and major changes were not in place by then, it would legislate, the Labour leader said.

'Casino operation'

As the party meets for its conference in Manchester, Mr Miliband told BBC1's Andrew Marr Show: "What I want is a country where a small business and an individual going into their High Street bank knows that that bank is working for them, not gambling with their money on the international markets. That doesn't happen at the moment.

"What really worries me is that we're seeing, and we've seen over the last year, a watering down of some of the reforms that the government was talking about to try and make that happen.

"This is a very clear message I have for the banks: Either they sort it out themselves - so that once and for all the High Street bank is not an arm of the casino operation - or the next Labour government will, by law, split those banks up so that once again we return to the best traditions of British banking, which is banks that serve the customer."

Recent scandals over Libor interest rate-rigging and payment protection insurance mis-selling had reinforced the case for change to happen, Mr Miliband said.

The Labour leader said the government's economic strategy had failed and borrowing was increasing. He advocated raising £2bn by taxing banker's bonuses to fund jobs for young people and housing.

The Labour Party conference slogan is "Rebuilding Britain".

He said: "You need a different approach.

"Yes there would be cuts if we were in government, but if you make the pace of those cuts slower, if you take less money out of the economy now it will be better for our economy, better for growth, better for people up and down the country and better for getting the deficit down sustainably."

If Labour were in government now, Mr Miliband said, the first budget change it would make would be keeping the 50p rate of income tax, which is due to be cut to 45p for those earning over £150,000 from April 2013.

"This government is cutting taxes for millionaires by £40,000 a year," he said.

A Treasury spokesman said: "The government is undertaking radical reform of the UK banking system to ensure that the mistakes of the past aren't repeated, that the taxpayer is protected and that the banks support the UK economy."

Start Quote

Since the onset of the global financial crisis, banks and banking regulation have changed completely”

End Quote British Bankers' Association

The British Bankers' Association (BBA) said: "Since the onset of the global financial crisis, banks and banking regulation have changed completely.

"The UK's major banks have committed publicly to further change - to do whatever is necessary to restore financial stability, to play their part in economic recovery and to earn back the trust of their customers."

The BBA said it was currently working with the government and regulators to implement ring-fencing.

On Saturday Mr Miliband told a panel of voters in Manchester that the country faced an "economic emergency".

Among policies he has revealed so far are the replacement of Ofgem with an energy regulator which has tougher powers to ensure prices are fair and a cap on pension fund management fees.

He also signalled that Labour was looking seriously at replacing student fees with a graduate tax and wanted to go still further than the party's existing pledge to reduce them to a maximum of £6,000 from the present £9,000.

 

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  • Comment number 35.

    All this user's posts have been removed.Why?

  • rate this
    -58

    Comment number 34.

    Seems he doesn't know his history ... the so-called casino banking operations were actually the parts of the banks that were profitable and subsidising the retail banking operations.

    Without the current combination, more UK banks would have needed even more government bailout.

    It was the retails banks' customers that dragged the banks under.

  • rate this
    -18

    Comment number 33.

    Does Ed not realise that it was the repeal of the Glass-Stegall Act by the Clinton government that allowed the investment and retail banks to join ?

    So our Great-Grandfathers realised after the last Depression that it was dangerous but Left wing politicians agnored the lessons of history ..... and guess what happened Ed.

  • rate this
    +2

    Comment number 32.

    A politician offering people what they are calling out for. Let's just see what excuse is given when he turns back on his word.

  • rate this
    +5

    Comment number 31.

    21.Rufus McDufus

    The Tories, started de-regulating the banks back in the days of Thatcher.

  • rate this
    +2

    Comment number 30.

    "Since the onset of the global financial crisis, banks and banking regulation have changed completely” British Bankers' Association

    Please show me some, nay any evidence of this. Savings rates have plummeted public ownership of stocks and trading volumes at all time lows and our banks are still as leveraged if not higher, all the while getting money at rates of 0.25-0.5% from BOE ECB & the FED

  • rate this
    -2

    Comment number 29.

    "Either they can do it themselves "

    Does he honestly expect turkeys to vote for Christmas?
    Of course they will not do it voluntarily they will have to be legislated the same as when Roosevelt introduced the Glass- Steagall laws after the depression in the 1930's. However in any event does he really think that peoples memories are that short labour can be re elected?
    Not a hope in hell!

  • rate this
    +1

    Comment number 28.

    Ed Miliband a Churchill or an Attlee? Answer = Attlee

  • rate this
    -1

    Comment number 27.

    A future Labour government.

    'Rebuilding Britain', after the last one

    You would never guess Ed M had anything to do with the last Lab government

    At least we dont see much of David M

  • rate this
    +1

    Comment number 26.

    World Bankers got us in to this mess. The ConDemnation party has INCREASED our debt. The Banks have to have a moral basis, or the next Government will enforce it. The poor are paying the greatest price. The rich are richer, in this country. A shame on all you rich snidey posters.

  • rate this
    0

    Comment number 25.

    Is this another promise? A sometime never or next parliament promise? Sign its the conference season. Dave is "hinting" if he wins again we can have a EU referendum. Hasn't that card been played already. I would not believe the whole pack of them if they told us it was Sunday today!

  • rate this
    +3

    Comment number 24.

    Finally Ed Miliband comes up with a potential vote-winner. The repeal of the Glass-Steagall Act gave the banks freedom to run huge risks - now we have bailed them out, while the bankers have pocketed millions of dollars in 'bonuses.'

    Separation of retail from casino culture can't come soon enough. I'm not a Labour voter, but if Miliband did this,he'd have my vote.

  • rate this
    +30

    Comment number 23.

    As with all of the disastrous policies of Thatcher the deregulation of the banks has ended in disaster. The country doesn’t need yet another Tory party in pink shirts and red ties like New Labour; it needs a government that puts the people of this country first, the only choice left is the greens

  • rate this
    -9

    Comment number 22.

    I do not know anybody less qualified to talk about banking than Ed. What was he doing when Gordon Brown was selling off our gold at rock bottom prices and spending all our reserves so when we really need it 'the kitty was empty'

  • rate this
    -9

    Comment number 21.

    So we should trust the party that de-regulated the banking system in the first place and did more to cosy up to it than any other party before? Pull the other one.

  • rate this
    +3

    Comment number 20.

    @Ji45
    As I recall it was the bankers who did the financial ruining and I suspect few of them have any leaning towards Labour.

  • rate this
    +2

    Comment number 19.

    Judging by the few comments thus far from HYS Tory diehards the Tories are seriously worried now - all they seem to be able to do is make snide remarks without any substance....!!!!

    Always good to see the party in power worried (insert adjective of choice) about the opposition, as it tends to encourage them to listen to the public more for fear of loosing their power come the next election!

  • rate this
    +3

    Comment number 18.

    Excellent. This is what we need from an opposition party - policies that shake things up. Just the idea that this might happen will make the banks sit up and listen - they might even start lending some money to prove the current system works. I just hope this isn't the only area in which Labour take a different route to the no-action Tories.

  • rate this
    -2

    Comment number 17.

    To be fair Ed is right on this one! Besides if it means free banking etc on my accounts then bring it on. Some UK citizens do not realise there are quite a few countries that CHARGE for current accounts and DO NOT PAY interest. So before you all jump for his throats think of the bigger picture and the consequences.

  • rate this
    +10

    Comment number 16.

    So if its such a good idea now why didn't they do it when they were in power. 100% effort to rebuild manufacturing is the only long term solution to getting out of the mess and the sooner we start the better

 

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