The bar was set high, and Ed Miliband has cleared it

"An audition before the country for the post of Prime Minister."

The Labour leader took a risk today. There was a technical risk: he spoke without notes, which can go wrong in many ways. And the speech was long, which exponentially increases the danger of stumbling and losing the audience. But that is a small practical obstacle compared to the tactical gamble that his speech represented, which was – in effect – advertising itself as an audition before the country for the post of Prime Minister.

He didn’t set it out in quite those terms, but throughout the week his team has been allowing the idea to float around that this would be a defining piece of oration. The Miliband camp took the highly hazardous step of acknowledging that there had been flaws in the way their candidate presented himself and admitting that voters are under-whelmed by the Labour leader – or downright dismissive. So expectations were ramped up, which is the opposite of what usually happens. (The standard line at these conferences is “it’s only a speech, why is everyone so excited, of course it’s not a make or break moment.” Etc.)

So the Miliband operation set the bar high. Luckily for them, the Labour leader appears to have cleared it. He seemed much more confident than he has done on similar occasions in the past; much more in control of the mood in the room and much more assertive in delivering his message. He got a few good laughs in the right places. His theme - “One Nation” - was a pretty audacious raid on Tory language and, as a fusion of traditional left appeals to solidarity and a patriotic idiom more commonly associated with the right, it clearly has potential as a platform to reach out to a wide section of the electorate. His aides are busy now describing it as a radical vision. (That, of course, is something they always do.)

The obvious criticism was that Miliband is still travelling very light on policy and still skirts over the question of tricky spending pledges. It wasn’t exactly a macho demonstration of tough choices and a trampling of party shibboleths. (That really isn’t Miliband’s style.) He is wide open to the charge of policy flimsiness. No doubt the defence will come out that David Cameron was no more heavily freighted with practical policy at an equivalent point in his time in opposition. The mid-term challenge is to attract voters attention and sustain their interest in a way that makes them think they might be looking at their next Prime Minister. That was the explicit task that Ed Miliband set himself this week. Did he pass the audition? Too early to tell. But I suspect the party will come away more confident that they can talk about Prime Minister Miliband and the Conservatives will be a little bit less complacent in their assumption that no one is listening.

Labour Party leader Ed Miliband acknowledges the applause after delivering his keynote on October 02, 2012 Photograph: Getty Images

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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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