Cable fires a warning shot at the bankers (and Osborne)

Business Secretary attacks the banks as "disingenuous in the extreme" for attempting to delay reform

Vince Cable built his reputation in opposition as the hammer of the bankers, so it's no surprise that he's taken exception to their recent behaviour. In an interview in this morning's Times (£), the Business Secretary criticises the "special pleading" of those banks attempting to use the eurozone crisis to delay structural reform. He declares: "It is disingenuous in the extreme to use the current context to argue against reform. Banks are in a way trying to create a panic around something which they know has got to happen".

While the likes of Angela Knight, the chief executive of the British Bankers' Association, argue that reform should be postponed until the economy has recovered, Cable takes a diametrically opposed position: recovery is impossible without reform. As he argues: "The fact that we continue three years after the 2008 crisis to still have anxieties about big financial institutions is all the more reason for grappling with this issue."

In other words, banks' retail and investment arms must be split, or at least ring-fenced, in order to ensure that institutions are no longer "too big to fail". As Mervyn King recently noted in an interview with the Daily Telegraph, it is the knowledge that the state will bail them out "on the downside" that allows banks to pay their staff such extravagant bonuses.

The context for Cable's intervention is the imminent publication (12 September) of the final Vickers report into banking. The Business Secretary is willing to accept the imposition of a ring-fence between banks' retail and investment divisions (the solution proposed by Vickers' interim report and endorsed by George Osborne in his Mansion House speech) but only on the condition that it can be "as effective as a full separation". But while the banks accept that some kind of structural reform is inevitable, they are prepared to do everything in their power to delay it. The fear among Lib Dems is that Osborne is prepared to appease them. As the FT reported earlier this month, the Chancellor is considering a plan to endorse ring-fencing but give banks until 2019 to implement the changes.

Should Osborne agree to an eight-year delay, he will find himself on a collision course with Cable. The Business Secretary accepts that any changes would require legislation and would not take place immediately. But it's safe to say that 2019 is not the date he has in mind. As Lord Oakeshott, Cable's representative on earth, told the Independent: "The banks are like car-makers who say they cannot afford proper brakes. There is no possible excuse for delay. Every day that goes by with no action on the Vickers report puts the British economy at more risk."

Cable's fear is that the banks view the postponement of reform as a prelude to its abandonment. But should the status quo survive, a repeat of the crash is not just possible but inevitable. The stakes could not be higher. For the sake of the economy, Cable must prevail.

George Eaton is political editor of the New Statesman.

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Five of Scotland’s most exciting general election battles

Will unionists hook the big Salmond in Gordon? And can the Tories overrun the Scottish Borders? Everything's up for grabs. 

In 2015, the Scottish National Party won Scotland in a landslide. With the next election expected in 2020, politics for the next five years looked homogenous, managerial and predictable. 

But then came Brexit, talk of a second independence referendum, and an early election. Now everything's at play. Depending on your perspective, this is a proxy indyref2, or a chance to condemn the Brexit government, or the opporunity to turn Scotland blue. One thing is sure - local contests will not just be about collecting the bins on time, but about the great constitutional questions of the day. With a giant splash of egotism. 

Here is my pick of the constituency battles to watch:

1. Who’s the biggest unionist of them all?

Constituency: East Renfrewshire
Battle to watch: Blair McDougall (Labour) vs Paul Masterton (Tory)

If anything symbolised the #Indyreffightback, it was the toppling of Jim Murphy, the Labour MP for East Renfrewshire in 2015. Murphy had slogged away for the No campaign during the 2014 referendum, braving egg throwers and cybernat centurions to make the case for the UK in 100 towns across Scotland. Being ousted by the Scottish National Party’s Kirsten Oswald was the biggest metaphorical egg of them all. 

Still, Murphy only lost by 3,718 votes. The self-styled defenders of the union, the Scottish Tories, have spied an opportunity, and made East Renfrewshire a target seat. Paul Masterton, a local activist, hopes to follow in the footsteps of Jackson Carlaw, who snapped up the same area for the Tories in the Scottish parliamentary elections last year. 

But who’s that appearing on the horizon? Blair McDougall, the former Better Together chief, is waving Labour’s banner. And no one can accuse him of flip flopping on the independence question. 

Since quashing a second independence referendum is the priority for pro-union voters of East Renfrewshire choose, they are likely to vote tactically. So which candidate can persuade them  he’s the winner?

2. The best shade of yellow

Constituency: East Dunbartonshire
Battle: Jo Swinson (Lib Dem) vs John Nicolson (Labour)

When Jo Swinson first won her home constituency in 2005, she was just 25, and by her early thirties, she was pacing the inner sanctums of the Coalition government. But in 2015, East Dunbartonshire voters decided to give her an early retirement and opted for the former broadcaster, the SNP’s John Nicolson, instead by 2,167 votes. 

In England, the Lib Dem surge has been fuelled by an emotional Europeanism. Swinson, though, can sing “Ode to Joy” as many times as she wants – it won’t change the fact that Nicolson is also against Brexit.
So instead, the contest is likely to come down to two factors. One is the characters involved. Nicolson has used his media clout to raise his profile – but has also been accused of “bullying” STV into dropping its political editor Stephen Daisley (Nicolson denies the claims)

The other is the independence referendum. East Dunbartonshire voted 61.2 per cent to stay in the UK in 2014. If voters feel the same way, and vote tactically this time, Nicolson may wish to resurrect his TV career. 

3. Revenge of the Tories

Constituency: Berwickshire, Roxburgh and Selkirk
Battle: John Lamont (Tory) vs Calum Kerr (SNP)

And the winner is… anyone who can reel off this constituency name without twisting their tongue. Let’s call it BRK, or Project Blue. 

BRK, a rural constituency in the Scottish borders, was once a comfortable home for the Liberal Democrat Michael Moore. He was driven out in 2015 by the SNP’s Calum Kerr. Indeed, such was the political turmoil that Moore slumped to third place. Kerr’s biggest rival was the conservative John Lamont. 

Two years later, the electoral horns are sounding, and Lamont is so confident of his victory that he is standing down as an MSP. There were just 328 votes between him and Kerr last time round. So who will be the new ruler of BRK?

4. Labour’s last stand

Constituency: Edinburgh South
Battle: Ian Murray (Labour) vs everyone else

When Ian Murray first won Edinburgh South for Labour in 2010, he might have been in his early thirties, but he was surrounded by Labour heavyweights like Douglas Alexander and Jim Murphy. Five years later, after a catastrophic election night, he was the only Labour MP left in Scotland. 

Murray’s survival is down partly to his seat – a leafy, academic constituency that epitomises Edinburgh’s pro-union, pro-Remain vote – and his no-nonsense opinion on both these issues (he’s no fan of Jeremy Corbyn either). A similarly-minded Labour candidate, Daniel Johnson, won the overlapping Scottish parliamentary constituency in 2016.

Now, though, Murray is fighting a defensive battle on two fronts. The SNP came second in 2015, and will likely field a candidate again. But those with longer memories know that Edinburgh South was once a Tory realm. Stephanie Smith, who is also standing for local elections, will be trying to take a bite out of Murray’s pro-union vote. 

Still, Murray has a good chance of outlasting the siege. As one Labour activist put it: “I think I’ll be spending the next six weeks camping out in Edinburgh South.” 

5. The big fish in the pond

Constituency: Gordon
Battle: Alex Salmond (SNP) vs Colin Clark (Tory)

Freed from the chains of high office, Alex Salmond is increasingly in touch with his inner charismatic bully. When not trying to wind up Anna Soubry, he is talking up a second independence referendum at inconvenient moments and baiting the Brexiteers. This is the big fish the pro-union movement would love to catch. 

But can they do it? Salmond won the seat in 2015 from the Liberal Democrats with a majority of 8,687 votes. Taking on this whopper is Colin Clark, a humble Tory councillor, and he knows what he’s up against.  He called for every unionist to back him, adding: “I have been in training since 2015 and I am fit and ready to win this seat in June.”

To get a sense of how much the Scottish referendum has changed politics, consider the fact that Labour activists are ludicrously excited by this prospect. But however slippery he may be, the SNP goliath in person can win over even devout unionists.  I’m not betting on a hooked Salmond any time soon. 

 

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

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