The intriguing timing of Rebekah Brooks's arrest

The ex-NI executive is arrested two days after she resigned - and two days before she is scheduled t

Rebekah Brooks, the former Chief Executive of News International, has been arrested.

Police said that a 43-year-old woman was arrested by appointment at a London police station on Sunday on suspicion of conspiring to intercept communications and on suspicion of corruption allegations. A spokesperson for Brooks confirmed that the appointment for her attendance at the police station was made on Friday.

Brooks was arrested by Operation Weeting, the investigation into phone-hacking, with involvement from Operation Elveden, which is investigating allegations of improper payments to police.

According to the BBC's Robert Peston, the arrest of Brooks is a "big deal". He adds: "News Int sources say they had no inkling Rebekah Brooks would be arrested when discussing her resignation last week".

The New Statesman's legal correspondent, David Allen Green, has questioned the timing of the arrest. He wrote on Twitter: "Am not a conspiracy theorist, but... the Met need to urgently explain the agreed timing of the Brooks arrest 'by appointment'."

It is the tenth arrest in connection with the investigation over phone hacking at News of the World.

In a statement, the Metropolitan police said:

At approximately 12.00 hrs a 43-year-old woman was arrested by appointment at a London police station by officers from Operation Weeting together with officers from Operation Elveden. She is currently in custody.
She was arrested on suspicion of conspiring to intercept communications, contrary to Section1 (1) [of the] Criminal Law Act 1977 and on suspicion of corruption allegations contrary to Section 1 of the Prevention of Corruption Act 1906.

Krishnan Guru-Murthy of Channel 4 News has questioned whether the arrest makes it harder for MPs to question Brooks at the Select Committee hearing on Tuesday. Tom Watson, the MP who has championed the investigation into hacking, added: "Had she made her appointment to be arrested before confirming attendance at our committee? I wouldn't be surprised."

John Whittingdale MP, another member of the Culture, Media and Sport select committee, told the Telegraph's Christopher Hope the arrest "change[s] the picture somewhat".

Meanwhile, Rupert Murdoch's biographer, Michael Wolff, wonders whether attention might turn now to James Murdoch, who is still employed by News Corporation. He tweets: "In 2008, during a two hour interview I did with Rebekah Brooks, she took seven phone calls from James Murdoch --that's how often they spoke.".

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

Getty
Show Hide image

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