Why we still need a public inquiry into the banks

A Leveson-style inquiry would expose the web of patronage and lobbying.

Listening to the Commons exchanges yesterday on the Chancellor’s proposal for a Parliamentary Committee of Inquiry into the LIBOR scandal was depressing.  It was the Commons at its worst: blame shifting; moralising; and, above all, opportunistic point scoring across the floor.  It’s not just the bankers who don’t get it; lots of MPs also do not realise the scale of the disaster that is the UK financial system.  A Parliamentary inquiry is a quite inadequate response to the scale of the problem. Some Parliamentary inquiries, notably those by the Treasury Select Committee, have done good work.  But even when not beset by party divisions they simply have not measured up to the job.  As in the notorious case of Fred Goodwin, they end up largely scapegoating individuals. Now Bob Diamond has followed his chairman in falling on his sword. It’s just as well he doesn’t have a knighthood; he could kiss it goodbye. 

Andrew Tyrie is an honourable man and will do his level best with the inquiry – if it happens.  But we can already see how inadequately he conceives the task: the inquiry will be "ring-fenced" (his words) to examine what the LIBOR tells us about the culture of the City. The LIBOR scandal is being trailed by the financial establishment as precisely that: a scandal.  In other words, a single disgraceful event, and in the manner of all scandals in Britain it is taking a predictable course: moralistic fulminations, and the sacrifice of a few prominent scapegoats.  Morals are important;  the amorality revealed in the Barclays’ e mails is shocking to normal people.  And  it is certainly the case that wrongdoers need to be pursued and punished.  But here at CRESC, where we have been tracking the financial crisis since 2007, we have been  arguing for some time that there are fundamental defects in our financial system, and that these won’t be solved by short term hunting down of scapegoats.  Faced with the  LIBOR scandal, politicians, bankers and regulators have responded  with the traditional Claude Rains defence: like Captain Renault, the character played by Rains in Casablanca, they are shocked, truly shocked, to discover that illicit gambling has been going on in the casino of the City of London.  But  the problems won’t be solved by firing a few top bankers, prosecuting a few white collar criminals, or even by conducting an inquiry into the workings of LIBOR – necessary though all these are.  We need to dispense with the illusion that a casino is the best way to organise the financial system for a modern economy – a truth that Keynes famously expressed many decades ago.

Our research reports show that the claimed economic benefits of the City for the "real" economy are an illusion, the product of effective PR over the years by the City elite.  Boring old manufacturing contributes about twice as much as glitzy financial services to the nation’s tax coffers.  And the City is doing nothing to solve our unemployment problems: throughout the great financial boom up to 2007 employment in finance was flat.  The  PR offensive has been effective because the City has enjoyed unique privileges in the government of finance, and unique access to top policy makers: both the Labour and Conservative parties have, in office, relied on paymasters from the financial elite.  And in turn they have, disgracefully, inserted financiers into key decision making positions.

The result is that the City is a web of markets proliferating increasingly complex and risky financial instruments that do little or nothing to promote welfare or efficiency in the wider economy.  The "other" scandal last week – the outrageous rip off at the expense of small business – is no single accident; it reflects the fact that finance is now in the business of creating and selling financial instruments regardless of the social harm they create.  Adair Turner’s condemnation of "useless" financial innovations is an understatement; the City has moved beyond the creation of the useless to the manufacture of the positively malign.

We need a full Leveson-style inquiry to examine how the casino is working, and to examine the web of patronage and lobbying that has allowed the City casino to trade with impunity.  An inquiry will be uncomfortable for many who were prominent in the New Labour years, and it is to the credit of Ed Miliband and Ed Balls that they have, nevertheless, recognised that full transparency is needed. We need an inquiry on the scale of Leveson, with the power to uncover the cultures and institutions that persuaded City operators that they could operate with impunity.  And we might yet get it if Labour refuses to play ball with Osborne’s proposal. But more important even than an inquiry, we need  a fundamental redefinition of the social and economic roles of finance. Banks must become public utilities with the duty to serve the wider economy, not players in casinos.  A Leveson-style inquiry would help provide the catharsis to  bring us to that point.

To read the full CRESC evidence and argument, download our report.

The claimed economic benefits of the City for the "real" economy are an illusion. Photograph: Getty Images.

Michael Moran is adjunct Professor of Government and Business in the University of Manchester Business School.

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With the BBC Food’s collection under threat, here's how to make the most of online recipes

Do a bit of digging, trust your instincts – and always read the comments.

I don’t think John Humphrys is much of a chef. Recently, as his Today co-presenter Mishal Husain was discussing the implications of the BBC’s decision to axe its Food website (since commuted to transportation to the Good Food platform, run by its commercial arm), sharp-eared listeners heard the Humph claim that fewer recipes on the web could only be a good thing. “It would make it easier!” he bellowed in the background. “We wouldn’t have to choose between so many!”

Husain also seemed puzzled as to why anyone would need more than one recipe for spaghetti bolognese – but, as any keen cook knows, you can never have too many different takes on a dish. Just as you wouldn’t want to get all your news from a single source, it would be a sad thing to eat the same bolognese for the rest of your life. Sometimes only a molto autentico version, as laid down by a fierce Italian donna, rich with tradition and chopped liver, will do – and sometimes, though you would never admit it in a national magazine, you crave the comfort of your mum’s spag bol with grated cheddar.

The world wouldn’t starve without BBC Food’s collection but, given that an online search for “spaghetti bolognese recipe” turns up about a million results, it would have been sad to have lost one of the internet’s more trustworthy sources of information. As someone who spends a large part of each week researching and testing recipes, I can assure you that genuinely reliable ones are rarer than decent chips after closing time. But although it is certainly the only place you’ll find the Most Haunted host Yvette Fielding’s kedgeree alongside Heston Blumenthal’s snail porridge, the BBC website is not the only one that is worth your time.

The good thing about newspaper, magazine and other commercial platforms is that most still have just enough budget to ensure that their recipes will have been made at least twice – once by the writer and once for the accompanying photographs – though sadly the days when everyone employed an independent recipe tester are long gone. Such sites also often have sufficient traffic to generate a useful volume of comments. I never make a recipe without scrolling down to see what other people have said about it. Get past the “Can’t wait to make this!” brigade; ignore the annoying people who swap baked beans for lentils and then complain, “This is nothing like dhal”; and there’s usually some sensible advice in there, too.

But what about when you leave the safety of the big boys and venture into the no man’s land of the personal blog? How do you separate the wheat from the chaff and find a recipe that actually works? You can often tell how much work a writer has put in by the level of detail they go into: if they have indicated how many people it serves, or where to find unusual ingredients, suggested possible tweaks and credited their original sources, they have probably made the dish more than once. The photography is another handy clue. You don’t have to be Annie Leibovitz to provide a good idea of what the finished dish ought to look like.

Do a bit of digging as part of your prep. If you like the look of the rest of the site, the author’s tastes will probably chime with your own. And always, always, wherever the recipe is from, read it all the way through, even before you order the shopping. There is nothing more annoying than getting halfway through and then realising that you need a hand blender to finish the dish, just as the first guest arrives.

Above all, trust your instincts. If the cooking time seems far too short, or the salt content ridiculously high, it probably is, so keep an eye on that oven, check that casserole, keep tasting that sauce. As someone who once published a magic mince pie recipe without any sugar, I’m living proof that, occasionally, even the very best of us make mistakes. 

Felicity Cloake is the New Statesman’s food columnist. Her latest book is The A-Z of Eating: a Flavour Map for Adventurous Cooks.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad