Ed Miliband urges bank branch sell-off to tackle 'broken' market


Ed Miliband: "For an industry that's supposed to be a service, [banking] has been a pretty poor service"

Related Stories

The UK's five largest banks are too powerful and should be forced to give up "significant" numbers of branches, Labour leader Ed Miliband has said.

The City had been "an incredibly poor servant of the real economy" for years and should be helping business grow and create jobs, he told activists.

A Labour government would "turn the tide" by creating two "challenger" banks to boost High Street competition.

David Cameron said the banking system was "much stronger" than in 2010.

The "big five" banks - HSBC, Barclays, RBS, Santander and Lloyds Banking Group - account for the majority of bank customers and lending.

Start Quote

When Ed Miliband and his team were looking for one word to sum up his approach to the banks they chose one they must have heard again and again at the movies. ”

End Quote

In his speech at the University of London, Mr Miliband likened the "broken" banking system to the energy market, claiming "too much power is concentrated in too few hands" and this has had a detrimental effect on enterprise and jobs.

Under Labour, Mr Miliband said, "instead of you serving the banks, the banks will serve you."

"We need a reckoning with our banks, not for retribution but for reform," he added.

Bank of England Governor Mark Carney said earlier this week that he supported the view that a cap on banks' market share "would not result in substantial improvement to competition".

But Mr Miliband said a Labour government would instruct the Competition and Markets Authority to report within six months of the May 2015 general election what the limit on a bank's market share should be and the timetable for any sell-off of branches, which should be completed by 2020.

Table of banks' market share

The opposition leader said he wanted to "establish for the first time a threshold for the market share any one bank can have of personal accounts and small-business lending".

Labour would also introduce a new National Credit Register for small and medium-sized businesses, to increase competition and improve lending to small business by allowing all banks access to comprehensive data on their credit histories.

'Labour's recession'

Mr Miliband insisted politicians could not "duck" the issue: "I am not talking about whether we should have new banks but about how we make it happen...

"It is not about creating new banks that control some tiny proportion of the market, but new banks that have a substantial proportion and can properly challenge existing banks.

Extracts of the speech to be given by the Labour leader say: "We have to get to the root of the decades-long problem in British banking - too much power concentrated in too few hands.

"Britain has one of the most concentrated banking systems in the world, with just four banks controlling 85% of small business lending."

Ed Miliband will pledge that big banks cannot get any bigger.

Bankers have said to me this would lead to what they call a perverse outcome, that as they approached the maximum size they would dump customers they deemed low quality or loss-making.

It is unclear whether these customers would be able to bank elsewhere.

"And we are not asking whether existing banks might have to divest themselves of a significant number of branches. We are asking how we make it happen."

Mr Miliband acknowledged the previous Labour government had made mistakes in bank regulation but said David Cameron was happy with a "steady as you go" approach to bank reform while more radical steps were needed.

Asked what he thought the maximum size of a bank should be, he said he would "not dream up a figure out of the air" and the regulators should decide.

The prime minister said the government had presided over the worst banking crash of recent times.

"We have been sorting out our banking system, which is much stronger than the mess we inherited from Labour," he said during a visit to Norfolk.

"But what we need is a whole economic plan - which builds the roads and railways, that helps the small businesses, which creates the jobs and cuts people's taxes - that is what this government is delivering."

Shares in RBS and a number of other banks fell marginally on Friday and the British Bankers Association said Labour's proposals would "undermine" the levels of service given to existing customers.

"Forcing people to change bank by selling their local branch is not what customers want," said its chief executive Anthony Browne.

Anthony Browne, from the British Bankers Association, says the customer "should decide which bank they want to be part of"

Efforts by the Lloyds Banking Group to dispose of more than 630 branches last year foundered after Co-op pulled out of a deal due to financial problems.

But the firm has re-launched the TSB retail bank, with about 600 branches, while RBS has set out plans to revive Williams and Glyn's - which ceased trading in 1985 -to take over RBS branches in England and Wales and NatWest outlets in Scotland.


More on This Story

Related Stories


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 1132.

    Miliband is only talking about the easy part of the problem. The serious difficult problem is changing the mind set of the financial industry which is that the public & business are there for their benefit rather than the other way around. Like politicians they're only interseted in short rather than long term profit as they will not be around when their shortsightedness is discovered.

  • rate this

    Comment number 877.

    Mr Miliband likened the "broken" banking system to the energy market, claiming "too much power is concentrated in too few hands"

    So, now he wants this power spread out to a few more people at the top, and maybe some lucrative post when he retires, like TB did?

    This will cost ordinary people more money, reduce their access to branches and give the banks more power to drop 'risky' customers.

  • rate this

    Comment number 874.

    This just highlights Labours huge lack of experience when comes to understanding or forming economic policy. The future of banking is NOT branches, they will become an irrelevance and only saddle these "new" banks with loss making assets. Also, this does not address the investment banking arms which is what caused the crash!!

  • rate this

    Comment number 718.

    We do need more competition to kick these monopolistic monsters into touch. I have been trying to open a business bank account for over 6 weeks and have to call some faceless people in a call centre every week to see how much longer it will take them to do something. No other company would make you wait 2 months to do something! It's the sheer laziness and arrogance of banks that needs to change.

  • rate this

    Comment number 708.

    Miliband and the rest of these career politicians really do not have a clue how to run a country.

    Please let's have real politicians running this country before it is totally destroyed. NHS, education, police, housing, armed forces, pensions, law and order, elderly care and so many more key areas now all in total chaos and turmoil through not fit for purpose politicians.


Comments 5 of 11


More Politics stories


Politics Live

    06:21: Good morning Alex Hunt Politics editor, BBC News Online

    Hello and welcome to a fresh day's coverage of political developments ahead of the 7 May General Election - yes there's just 100 days to go now. You'll be able to listen or watch all the BBC's political output today on this page and we'll be bringing you all the best clips, quotes, analysis, reaction and breaking political news throughout the day. If you want to see what to expect, here's yesterday's campaign countdown.



Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.