U.K. opposition Labour leader Ed Miliband put the spotlight on banks as his party began its annual conference, saying that if he becomes premier he’ll force through laws to break them up unless they change their behavior.
Prime Minister David Cameron’s government plans to implement the recommendations of John Vickers’s Independent Commission on Banking to establish firewalls between banks’ consumer and investment operations. Miliband, speaking in Manchester, northern England, said yesterday the Vickers plan has already been “watered down” and expressed concern it wouldn’t be pushed through completely.
Miliband mentioned “banks,” “bankers” and “banking” 26 times in an interview on BBC Television’s “Andrew Marr Show,” more than he said “Labour” or “government.” He said that, unlike Cameron, he would “stand up to the banks” if he won power. He also renewed a call for a tax on bankers’ bonuses.
“There’s two things that can happen,” Miliband was quoted as telling the Observer newspaper in an interview published yesterday. “The banks can change direction and say we’re going to implement the spirit and principle of Vickers to the full, which means the hard ring-fence between retail and investment banking. Either they do that or I’m giving a very, very clear message which is that the next Labour government will just by law break up retail-investment banks.”
London’s financial industry has been marred by scandal, with Barclays Plc being fined a record 290 million pounds ($468 million) in June for manipulating the benchmark London interbank offered rate. A government-commissioned report recommended three days ago that the British Bankers’ Association should be stripped of responsibility for managing the rate and oversight handed to the U.K.’s financial regulator.
People “want safety in their banking system; they want clarity about what’s happening in their banks,” Miliband told the BBC. “If you have banks that work for small businesses and get them the loans, then that’s better for the economy and better for them.”
While the government is pushing legislation through Parliament to put most of the Vickers recommendations into effect, Chancellor of the Exchequer George Osborne announced in June that lenders won’t have to hold as much capital as the commission proposed.
The Labour leader also said his party would reverse a cut in the top rate of income tax to 45 percent from 50 percent if it were in power now, as well as repealing the changes made by Cameron’s Conservative-led government to the management of the state-run National Health Service.
Miliband said the idea of a mansion tax on the most expensive homes, a key policy of Cameron’s Liberal Democrat coalition partners, is “definitely worth considering” and that there could be cross-party support for such a move were the government to introduce it.