Labour plan to cap market share of High Street banks

 
Woman taking money out of a cash point

The big high street banks would be forced to sell off branches to boost competition if Labour wins power.

Ed Miliband says capping the market share of the "big five" - HSBC, Barclays, Royal Bank of Scotland, Santander and Lloyds - would make it easier for new banks to challenge them.

The Labour leader says this will lead to a better deal for bank customers.

Labour also wants the Treasury to block plans by RBS to pay staff bonuses worth double their salary.

In 2012, the leading five banks accounted for 90% of the market share in Britain in terms of customer numbers and total lending figures.

In July 2012, the Labour leader said the banking industry had become "economically damaging and socially destructive" and needed far-reaching change - and Friday's speech will see him outline what the party would do if it won power.

Mr Miliband will argue that what he calls a "living standards crisis" for those on low and middle incomes can only be addressed by making long-term structural changes to the British economy, including banking.

Explaining the bank branch proposal, shadow chief secretary to the Treasury Chris Leslie said: "We have got to give customers more choice. Fees and charges are too high. There is not enough of a sense of competition, a hunger among the banks to serve customers."

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Politicians from all parties have called for more competition in the industry, saying this would promote better deals and service for customers.

The government has passed new laws to force regulators to produce greater competition in banking, acting on recommendations of the Parliamentary Commission on Banking Standards and the Vickers Commission.

Responding to reports of Mr Miliband's planned announcement, a Conservative Party spokesman said the Labour leader was talking about a problem "that was created by the Labour government he was at the heart of".

Start Quote

You [Labour] are playing fast and loose with millions of people's jobs”

End Quote Tory MP Mark Garnier

He added: "That's why part of David Cameron's long-term economic plan is about fixing our banking system - by increasing competition on the High Street, ring-fencing retail from investment banking so that no bank is too big to fail, and increasing lending to business.

"There is already greater choice on the high street now than there was under Labour.

"Our changes will mean a more secure banking system for businesses, hardworking people and their families."

In a separate development, Labour has denied Conservative claims that if the government were to block large bonuses at the RBS that it would damage the bank's ability to hold onto high performing staff.

Under new EU rules, the bank - which is largely government owned - must seek permission from shareholders if it wants to award bonuses greater than 100% of salary.

The Treasury say RBS have not made any requests regarding bonuses and payments to staff across the banking sector as a whole are down.

But Labour's Chris Leslie said it was "not acceptable at a time when there is a cost of living crisis and banks to be going beyond that 100% level at RBS - that's just wrong".

Tory MP Mark Garnier said bonuses were a "reward for enterprise" and he accused Labour of attempting to "destroy the one industry we have which is a net exporter of services".

He told Mr Leslie: "You are playing fast and loose with millions of people's jobs. You are playing fast and loose with the economy and it is just nonsense."

 

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  • rate this
    +2

    Comment number 290.

    More words of cock eyed economic "wisdom" from Ed Miliband. Where is the evidence that underpins his conclusions? Just another despairing attempt by the Labour leader to focus attention away from the day by day news of economic recovery.

  • rate this
    +1

    Comment number 289.

    @163 mike
    Very funny. No mention of the destruction of the economy leading to the increased debt burden forced on the current Govt by the previous one.
    Taking a monochromatic view of the debt in a world of colour is pretty stupid don't you think?

  • rate this
    +4

    Comment number 288.

    It's amazing - not content with stuffing up the economy when they were in power, Miliband and Balls are now attempting to do it when not in power through creating uncertainty with this and their other ridiculous economic policies e.g. freezing energy bills.

    Let's be glad of the fact that the economy is growing again, unemployment is falling and companies are feeling confident enough to invest.

  • rate this
    +1

    Comment number 287.

    "Have you ever considered learning anything?"

    It seems that in terms of the way this sentence is structured that you might benefit from "learning anything"!

    A for free market economies perhaps you'd like to suggest where I can find an example of one.

  • rate this
    +4

    Comment number 286.

    if I did to my business what Milliband and Balls did to the British enonomy i would be sacked. They would almost bankrupt the UK again if given the chance

  • rate this
    0

    Comment number 285.

    @Geoff, those silly enough to pay double digit interest rates on credit cards, subsidise the cards of those, like me, who never pay any interest on credit cards.

    If you are regularly paying interest on a credit card, then there is something wrong with your budgeting.

  • rate this
    +4

    Comment number 284.

    The rubbish Millband comes out with shows what a desperate mess the Labour Party is in.

  • rate this
    0

    Comment number 283.

    Stop them closing existing branches for a start! Force them to re-open many of them in fact. It's getting so a 5 mile + journey is needed in order to visit a bank to pay in a cheque!
    While we're at it, make them put customer service before profit, make bonuses illegal, force a split between high st and investment banking.
    I won't hold my breath. Which bank pays most into party funds then Ed?

  • rate this
    +2

    Comment number 282.

    The Labour Party- capping competition on the High Street. Of course they want to cap competition, Socialism doesn't allow for competition!

  • rate this
    +5

    Comment number 281.

    Miliband says capping the banks size "will lead to a better deal for bank customers".
    Mr Miliband forgets that there is the NS&I that operates through the Post Office's branches. So if Mr Miliband was in power he would be able to deliver any deal he likes for the banking customers. There is no need to push the private banks to deliver the politicians' edition of the banking

  • rate this
    +8

    Comment number 280.

    The economy's picking up, inflation's falling so let's attack the banks and try and get the pitch fork wielding masses out in force. It's pathetic. This is the man whose Government convinced Lloyds to take over HBOS, completely flouting all competition law and creating a monster. Let's have some real policies or some peace and quiet.

  • rate this
    +4

    Comment number 279.

    No260 Matt,

    You seem to be implying that here today, gone tomorrow Westminster politicians 'run' free market economies.

    If so have you any idea how stupid you appear?

    I am informed that it is only political dummies who adhere to such nonsense.

    Have you ever considered learning anything?

  • rate this
    -4

    Comment number 278.

    Too many mergers and acquisitions have taken place over recent years. Selling off branches will not necessarily cure this. Looking at the charges that the banks impose on customers would make a large difference. Looking into why credit card companies charge double digit interest rates, which have not gone down even with BoE rates remaining at 0.5%, would be far better.

  • rate this
    -1

    Comment number 277.

    Politicians cannot turn the clock back, and certainly not by forcing the closure of branches. Competition went out of the mortgage market when banks were allowed to take over building societies.So that the big banks now control the mortgage market and at the same time became to big to fail. Banks have lost all idea of serving the public and scams such as PPI show they are only motivated by greed.

  • rate this
    +1

    Comment number 276.

    'Dodgy Dave' and his friends appear to be keen on holding referendums.

    When can we expect him to hold a one on the following question:

    Should we, the owners of RBS pay some of our million pound employees double their salary in bonus payments?

  • rate this
    -1

    Comment number 275.

    274
    at the time retail banks were issued 'closed until further notice signs'. Luckily i knew about it and took out loads of cash in case. As we know it came within hours of it happening. The best thing is to ensure the banking function can work regardless of what the banks do to hold the nation hostage. A public service bank means the spivs can't hold the nation to ransom like they do now.

  • rate this
    +1

    Comment number 274.

    @271. jauntycyclist
    it might have in the lack of the 'banking function in society' being able to function have created a change in the system that actually allowed anyone to create a bank and operate as a bank and keep deposits for people. All we got by bailing them out is a regulatory schism and a ridiculously high bar to anyone but the current players carrying out banking functions in society

  • rate this
    +2

    Comment number 273.

    Oh Dear, Another Hare-brained scheme by Milliband and his anti business cronies. What about the customers, what about the people who work in the banks, Let people have choice not the nanny state again, it's easy to move banks if you choose to. Again they are out of touch.
    As to bonuses what about the people who worked there honourably? Don't forget also that tax will be paid on earnings!

  • rate this
    -1

    Comment number 272.

    Having killed off our Manufacturing Sector, they are now intent on killing off the Banking Sector, what will we be left with when these naïve socialists complete their agenda. The only logical answer would be to become an off shore Chines Territory.

  • rate this
    0

    Comment number 271.

    267

    the only reason the banks had to be bailed out is because it would have brought down the banking function in society. By isolating the banking function in a public service bank that will be a very basic pay your bills bank then the other banks can go bust and the nation is insulated from it. There will be no need to bail them out no need for insurance. The Public Service Bank is THE insurance

 

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