British society has always tended to bubble over into violence

Those who pin the blame for the riots on contemporary conditions alone are missing the point.

It was, I suppose, inevitable that media comment in the wake of Tottenham and other recent riots would present them as a direct result of specific contemporary conditions. A typical example is provided by Melanie Phillips in today's Mail, who identifies it, without citing any particular evidence, as the "outcome of a three-decade liberal experiment which tore up virtually every basic social value". However, even some of those commentators locating the cause elsewhere implicate entirely modern phenomena: the pressure of mass-media consumerism, for example.

Unfortunately for this kind of analysis, there is plenty of evidence that British society has always tended to bubble over into violence, riot and looting, irrespective of the shape of that society at the time. The idea that the presence of "basic social value[s]" prevented such behaviour in the past does not stand up to scrutiny. In June 1940 a combination of wartime xenophobia and privation led to an outbreak of looting, burning and destruction aimed at Italian businesses in cities across England and Scotland. This is today almost forgotten, but its wartime context does not excuse the crossing of boundaries it represented.

Riots and disturbances were common enough in the mediaeval period, often breaking out into armed insurrection. But even the supposedly compact and ordered society of the 18th and 19th centuries was not immune. 1778's Gordon Riots were amongst the most violently destructive in London's history; they were triggered by a protest against the softening of anti-Catholic legislation, but were fanned by a dire economic situation, itself caused by Britain exhausting itself in a series of foreign wars. Lurid accounts exist of rioters setting fire to buildings and drinking themselves into a stupor. Even young children were swept up in events, subsequently undergoing the same treatment as adults in the usual response of the time, as several were hung afterwards: "I never saw children cry so," recorded a bystander.

Of course, the fact that riots have occurred in all times and in all kinds of society has failed to prevent attempts to argue the contrary. The Mail also quoted Desmond Morris, stating that humans are "programmed" to live in villages, and that rioting is an urban phenomenon - a different facet of the narrative that such violence is fundamentally a modern issue.

Perhaps Morris has never heard of the "Swing" Riots of 1830, in which agricultural workers burnt barns, hayricks, threshing machines and rural workhouses across Southern England and the Midlands in a protest against the increasing financial pressure on the rural poor: again, executions and transportations followed in their wake, while as with the Gordon Riots, the media of the time raised the spectre of foreign agitation. It was difficult to admit the thought that normal British subjects might, under particular conditions and fuelled by adrenaline, completely lose their heads.

Those familiar with the history of Wales will know of the Rebecca Riots of the late 1830s and 1840s, another fundamentally rural phenomenon. Groups of men, often dressed as women or masked to disguise themselves, attacked and destroyed tollgates in protest against a continuing squeeze on the incomes of farmers and smallholders. In this case, most of the rioters were never caught, perhaps because there was widespread agreement with their actions; "Rebecca" became well-known in Welsh history as an example of standing up to English economic influence.

The incidents that triggered these riots were often as widely different as the areas in which they occurred. Even so, there is one unifying factor: economic pressure. All took place against a background of falling incomes, increasing costs, and rising resentment. Moreover, the response - prior to the 20th century, at least - was always the same. In previous centuries, we sent in the army; men were transported for life; we hung children for joining in looting; yet riots continued, despite the inevitability of punishment, because little was done to mitigate the cause along with attempting to restore order. It would be good to think that we, as a society, have progressed since that point.

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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