Why I voted against Murdoch

Condemning Rupert Murdoch did not diminish our committee's report.

The culmination of one of the most high-profile and prolonged select committee inquiries has rightly seen News International severely criticised for the widespread phone-hacking that took place and its handling of the aftermath.  The culture, media and sport select committee select committee has been looking at this issue for many years, going back to the Operation Motorman reports and the initial phone-hacking allegations.  Along with dogged campaigning from the Guardian, Mark Lewis, the legal representative of many of the victims, and others, we have kept this in the public eye and contributed to what will hopefully be the wholesale clearing up of the British press.  I think that without our inquiries, the Leveson inquiry, which I was pressing Cameron and Clegg to set up very early on, would have been less likely and the Metropolitan Police may not have reopened its investigation.

Our report is still very much at the beginning of the end of this story.  The Leveson process will make wide-ranging proposals on how to clean up journalism and, hopefully, thanks to our investigation and recommendations, this process will have better material and perspective from the News International aspect.  The police and potential judicial process also has to run its course.

We can, however, make some very clear conclusions already and our work should contribute to Leveson, inform Ofcom and, more immediately, prompt debate in Parliament.  It is clear that News International executives misled the committee and we must not lose sight of that.  But as the report concluded, “if at all times Rupert Murdoch did not take steps to become fully informed about phone-hacking, he turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications.”

Some have argued that going further and concluding that Murdoch is not "fit" to exercise the stewardship of a major international company detracted from the report and highlighted a committee split along party lines.  What would others have said if the votes had gone the other way with the coalition MPs on one side and Labour on the other?  That would just as surely have been portrayed as a split along party lines.

Ever since the Murdochs appeared before the committee, the narrative of our inquiry, especially in the public’s view, has been on their behaviour; I don’t think commenting on their competence detracts from the very serious issue of the other executives clearly misleading Parliament.  Unlike the preconceived ideas others may have had in approaching this inquiry, I have been very careful to read the volumes of evidence we have gathered before taking decisions on which way to go in the final report.  As a whole, the amendments weren’t as split along party lines as has been portrayed. For example, only two Conservatives voted against the conclusion that James Murdoch’s competence should be called into question.

What is ultimately most important is for the media to never experience such a scandal again.  A result of this entire process must be a press that is trusted by the public and is independently regulated.  The Press Complaints Commission clearly had failings, one of which was the number of editors on its board; consequently I referred to it in the House as being as useful as a fishnet condom.  A new body that is free from the influence of editors, executives and politicians must be far more rigorous in pursuing complaints and potential wrongdoing.  That said, one benefit I hope this whole process will have is that the press will never again be tempted to resort to such illegal measures in order to make a quick profit.

Adrian Sanders is the Liberal Democrat MP for Torbay and a member of the House of Commons culture, media and sport committee.

The committe on phone-hacking concluded that Rupert Murdoch was not a fit person to exercise the stewardship of a major international company. Photograph: Getty Images.

Adrian Sanders is the Liberal Democrat MP for Torbay

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation