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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Commons Confidential: What happened at Tom Watson's birthday party?

Finances, fair and foul – and why Keir Starmer is doing the time warp.

Keir Starmer’s comrades mutter that a London seat is an albatross around the neck of the ambitious shadow Brexit secretary. He has a decent political CV: he was named after Labour’s first MP, Keir Hardie; he has a working-class background; he was the legal champion of the McLibel Two; he had a stint as director of public prosecutions. The knighthood is trickier, which is presumably why he rarely uses the title.

The consensus is that Labour will seek a leader from the north or the Midlands when Islington’s Jeremy Corbyn jumps or is pushed under a bus. Starmer, a highly rated frontbencher, is phlegmatic as he navigates the treacherous Brexit waters. “I keep hoping we wake up and it’s January 2016,” he told a Westminster gathering, “and we can have another run. Don’t we all?” Perhaps not everybody. Labour Remoaners grumble that Corbyn and particularly John McDonnell sound increasingly Brexitastic.

To Tom Watson’s 50th birthday bash at the Rivoli Ballroom in south London, an intact 1950s barrel-vaulted hall generous with the velvet. Ed Balls choreographed the “Gangnam Style” moves, and the Brockley venue hadn’t welcomed so many politicos since Tony Blair’s final Clause IV rally 22 years ago. Corbyn was uninvited, as the boogying deputy leader put the “party” back into the Labour Party. The thirsty guests slurped the free bar, repaying Watson for 30 years of failing to buy a drink.

One of Westminster’s dining rooms was booked for a “Decent Chaps Lunch” by Labour’s Warley warrior, John Spellar. In another room, the Tory peer David Willetts hosted a Christmas reception on behalf of the National Centre for Universities and Business. In mid-January. That’s either very tardy or very, very early.

The Labour Party’s general secretary, Iain McNicol, is a financial maestro, having cleared the £25m debt that the party inherited from the Blair-Brown era. Now I hear that he has squirrelled away a £6m war chest as insurance against Theresa May gambling on an early election. Wisely, the party isn’t relying on Momentum’s fractious footsloggers.

The word in Strangers’ Bar is that the Welsh MP Stephen Kinnock held his own £200-a-head fundraiser in London. Either the financial future of the Aberavon Labour Party is assured, or he fancies a tilt at the top job.

Dry January helped me recall a Labour frontbencher explaining why he never goes into the Commons chamber after a skinful: “I was sitting alongside a colleague clearly refreshed by a liquid lunch. He intervened and made a perfectly sensible point without slurring. Unfortunately, he stood up 20 minutes later and repeated the same point, word for word.”

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era