Jan Royall on why putting people first is the only way to restore faith in our banking system
Whilst the Coalition was yesterday focused on presenting its Lords reform Bill, Ed Miliband was addressing issues of prime importance to the people and businesses of our country: the economy and the banking system.
Building on his prescient speech last September on predatory capitalism (a concept that many opinion formers didn’t seem to understand at the time), Ed said that it was time for an economy that puts people ahead of profit.
Last year, Eds Miliband and Balls provided the analysis of the problems. Now they are working on the solution – an economy that works for working people, not just those at the top. The commoditisation of communities must stop and responsibility must form the heart of our banking system. The road to economic recovery is not paved with reckless, short term capitalism, but investment and honesty. And Ed Miliband was absolutely right to say that trust just isn’t there any longer: to be called a banker used to be a badge of honour, now it is seen as an insult. Indeed, trust in bankers, at 93% 20 years ago is now a mere 10%.
At the moment we don’t have a banking system that works for working people. They have had enough of irresponsibility, unfairness and a culture in which morality is divorced from the power that the banks wield. We saw this just this week, when in response to the Libor scandal, applications to the Co-op bank rose by 25%. The country wants politicians to challenge these norms and Labour are ready to do that.
Never again can we have the situation in which we have banks that are ‘too big to fail,’ never again can we have people being sold incomprehensible financial products and never again can we have gross recklessness across the financial services industry. The Vickers report was the first step towards a brighter future for UK banking, now politicians need to take the next step and implement its ideas.
Labour’s proposals are clear. We want to build a culture of responsibility by ensuring greater competition in the sector, a separation of retail and investment banking, a new British Investment Bank to aid our vital SMEs and a change in culture that reflects integrity, responsibility and fairness. It’s also clear that domestic action alone will not be enough to solve the financial problems facing our society, so we must engage openly with the EU proposals to limit bonuses. The current situation is obscene, with arrogant bankers at the top creaming off unjust rewards whilst undermining the very system they are milking.
It’s great that Jon Cruddas – who brings together intellectual dynamism with clear understanding of people’s day to day lives – is heading Labour’s policy review, working with Ed Miliband, the Shadow Cabinet and the Party to develop policies to rebuild our economy, society and politics. All of these themes are intertwined and all have trust at their core. And ensuring real change for Britain’s banks will be one step to restoring the trust critical for underpinning the economic growth we so desperately need.
Baroness Jan Royall of Blaisdon is Labour’s Leader in the Lords