Barclays raises the stakes in banking reform

Bob Diamond warns that Barclays could leave the UK if it is unhappy with the coalition's banking ref

Bob Diamond, the man once described by Peter Mandelson as "the unacceptable face of banking", has warned that Barclays could leave the UK if it is unhappy with the coalition's eventual banking reforms. Sky News's business editor Mark Kleinman reveals that Diamond told the bank's shareholders that "It's no longer a question of whether Barclays wants to stay in the UK but whether the UK wants Barclays."

So, why the confrontational language? Well, there's just over a month to go until the Vickers Commission delivers its final report on banking, and the commission is likely to recommend that banks' high-risk investment arms should be ring-fenced from their retail operations. This reform, endorsed by George Osborne in his Mansion House speech, would (in theory) allow investment banks to fail without needing to be bailed out by the state.

At the time, it seemed as if Osborne had hit upon a neat compromise, one that was acceptable to both the banks and the Lib Dems. But it's no longer looking so simple. Vince Cable, for instance, used a recent speech to make it clear that he still favours a full Glass-Steagall-style separation, while the banks are increasingly anxious that any reform will make it harder for them to raise capital. Now, added to this combustive mix, is Diamond's threat to move Barclays' headquarters abroad.

Of course, Diamond's threat may be an empty one (and the government should call his bluff) but that won't stop it being taken seriously by the Treasury. Having declared that Britain is "open for business", Osborne will be desperate to avoid anything that suggests the reverse is true. The $64,000 question is whether he can do so, while simultaneously appeasing the Lib Dems. Cable, who has long believed that the banks require "fundamental surgery", has said that he will only accept a ring-fence on the condition that it can be "as effective as a full separation" and that it can be introduced at "a lower cost". Should Vickers fail to pass these tests, it's likely that the Business Secretary, emboldened by his victory over Rupert Murdoch, will consider all responses, up to and including his "nuclear option". Osborne will need all of his guile and cunning to identify a solution that all sides are prepared to tolerate.

George Eaton is political editor of the New Statesman.

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Michael Gove definitely didn't betray anyone, says Michael Gove

What's a disagreement among friends?

Michael Gove is certainly not a traitor and he thinks Theresa May is absolutely the best leader of the Conservative party.

That's according to the cast out Brexiteer, who told the BBC's World At One life on the back benches has given him the opportunity to reflect on his mistakes. 

He described Boris Johnson, his one-time Leave ally before he decided to run against him for leader, as "phenomenally talented". 

Asked whether he had betrayed Johnson with his surprise leadership bid, Gove protested: "I wouldn't say I stabbed him in the back."

Instead, "while I intially thought Boris was the right person to be Prime Minister", he later came to the conclusion "he wasn't the right person to be Prime Minister at that point".

As for campaigning against the then-PM David Cameron, he declared: "I absolutely reject the idea of betrayal." Instead, it was a "disagreement" among friends: "Disagreement among friends is always painful."

Gove, who up to July had been a government minister since 2010, also found time to praise the person in charge of hiring government ministers, Theresa May. 

He said: "With the benefit of hindsight and the opportunity to spend some time on the backbenches reflecting on some of the mistakes I've made and some of the judgements I've made, I actually think that Theresa is the right leader at the right time. 

"I think that someone who took the position she did during the referendum is very well placed both to unite the party and lead these negotiations effectively."

Gove, who told The Times he was shocked when Cameron resigned after the Brexit vote, had backed Johnson for leader.

However, at the last minute he announced his candidacy, and caused an infuriated Johnson to pull his own campaign. Gove received just 14 per cent of the vote in the final contest, compared to 60.5 per cent for May. 


Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.