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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Jeremy Corbyn's Labour conference speech shows how he's grown

The leader's confident address will have impressed even his fiercest foes. 

It is not just Jeremy Corbyn’s mandate that has been improved by his re-election. The Labour leader’s conference speech was, by some distance, the best he has delivered. He spoke with far greater confidence, clarity and energy than previously. From its self-deprecating opening onwards ("Virgin Trains assure me there are 800 empty seats") we saw a leader improved in almost every respect. 

Even Corbyn’s firecest foes will have found less to take issue with than they may have anticipated. He avoided picking a fight on Trident (unlike last year), delivered his most forceful condemnation of anti-Semitism (“an evil”) and, with the exception of the Iraq war, avoided attacks on New Labour’s record. The video which preceded his arrival, and highlighted achievements from the Blair-Brown years, was another olive branch. But deselection, which Corbyn again refused to denounce, will remain a running sore (MPs alleged that Hillsborough campaigner Sheila Coleman, who introduced Corbyn, is seeking to deselect Louise Ellman and backed the rival TUSC last May).

Corbyn is frequently charged with lacking policies. But his lengthy address contained several new ones: the removal of the cap on council borrowing (allowing an extra 60,000 houses to be built), a ban on arms sales to abusive regimes and an arts pupil premium in every primary school.

On policy, Corbyn frequently resembles Ed Miliband in his more radical moments, unrestrained by Ed Balls and other shadow cabinet members. He promised £500bn of infrastructure investment (spread over a decade with £150bn from the private sector), “a real living wage”, the renationalisation of the railways, rent controls and a ban on zero-hours contracts.

Labour’s greatest divisions are not over policy but rules, strategy and culture. Corbyn’s opponents will charge him with doing far too little to appeal to the unconverted - Conservative voters most of all. But he spoke with greater conviction than before of preparing for a general election (acknowledging that Labour faced an arithmetical “mountain”) and successfully delivered the attack lines he has often shunned.

“Even Theresa May gets it, that people want change,” he said. “That’s why she stood on the steps of Downing Street and talked about the inequalities and burning injustices in today’s Britain. She promised a country: ‘that works not for a privileged few but for every one of us’. But even if she manages to talk the talk, she can’t walk the walk. This isn’t a new government, it’s David Cameron’s government repackaged with progressive slogans but with a new harsh right-wing edge, taking the country backwards and dithering before the historic challenges of Brexit.”

After a second landslide victory, Corbyn is, for now, unassailable. Many MPs, having voted no confidence in him, will never serve on the frontbench. But an increasing number, recognising Corbyn’s immovability, speak once again of seeking to “make it work”. For all the ructions of this summer, Corbyn’s speech will have helped to persuade them that they can.

George Eaton is political editor of the New Statesman.