It's astonishing the banks haven't been ring-fenced earlier

The in-kind subsidy to consumer banks has been crying out for a limit.

The chancellor has announced his plan to "electrify" the proposed ring-fence between retail and investment arms of British banks — which George calls the "Jurassic Park solution" — ensuring that if a bank tries to breach the ring-fence, it will be separated fully.

Much of the criticism of the ring-fence, as well as the Chancellor's defence of it, stems from its effects on financial stability. That's obviously important, but there's a bigger reason why such a move is long over-due, and that's the state backing of retail banks.

This backing isn't even a question of the too big to fail subsidies which hand around £34bn to the biggest banks. Instead, it's the effect of the financial services compensation scheme.

That's the government body which protects up to £85,000 of individuals' deposits with accredited banks. Since it was formed, it has paid out over £26bn, mostly in the aftermath of the financial crisis, to customers of retail banks which went bust.

And that's good! The FSCS is necessary in a world in which customers can't be expected to judge the financial health of a bank when deciding where to keep their money, and even more necessary given that a bank account is largely deemed a prerequisite of living a normal life in the UK today (hence the concern over the lack of basic bank accounts). But, at least on a cursory analysis, the FSCS also reduces the cost of capital for banks, because they don't have to compensate customers for the risk that they will lose all their deposits.

For a bank that's not failing, though, the FSCS is an in-kind subsidy, and it makes sense to limit that distortion. That's the reason for a ring fence: it ensures that the government is only subsidising the consumer banking sector, rather than the entire sector at once.

The stability arguments are important; and the ring-fence does indeed lessen the downside of a casino bank going under (although the amount it will lead to broader stability of the financial system is more questionable). But even without them, there'd be a strong prima facie reason for some kind of limit to the amount consumer deposits can be leveraged.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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10 times Nicola Sturgeon nailed what it's like to be a Remain voter post-Brexit

Scotland's First Minister didn't mince her words.

While Westminster flounders, up in Holyrood, First Minister Nicola Sturgeon has busied herself trying to find a way for Scotland to stay in the European Union

And in a speech on Monday, she laid out the options.

The Scottish Nationalist acknowledged the option of independence would not be straightforward, but she added: “It may well be that the option that offers us the greatest certainty, stability and the maximum control over our own destiny, is that of independence.”

She also hinted at a more measured stance, where Scotland could “retain ties and keep open channels” with the EU while other countries within the UK “pursue different outcomes”. 

And she praised the new PM Theresa May’s commitment to wait for a UK-wide agreement before triggering Article 50.

But Sturgeon’s wide-ranging speech also revisited her memories of Brexit, and the days of chaos that followed. Here are some of the best bits.

1. On the referendum

I am the last person you will hear criticising the principle of referenda. But proposing a referendum when you believe in the constitutional change it offers is one thing. Proposing - as David Cameron did - a referendum even though he opposed the change on offer is quite another. 

2. On the result

I told the Scottish Parliament a few days later that I was “disappointed and concerned” by the result. I have to admit that was parliamentary language for a much stronger feeling.

3. On the Leave campaign

I felt, and still feel, contempt for a Leave campaign that had lied and given succour to the racism and intolerance of the far right.

4. On leadership

It seemed abundantly clear to me that people - even many of those who had voted to Leave - were going to wake up feeling very anxious and uncertain. It was therefore the job of politicians, not to pretend that we instantly had all the answers, but to give a sense of direction. To try to create some order out of the chaos. That’s what I was determined to try to do for Scotland. I assumed that UK politicians would do likewise. I was wrong. 

5. On EU nationals

I felt then – and still feel very strongly today - that we must give them as much reassurance as possible. It is wrong that the UK government has not yet given a guarantee of continued residence to those who have built lives, careers and families here in the UK.

6. On karma

You tend to reap what you have sown over many years. It shouldn’t have come as a surprise to politicians who have spent years denigrating the EU and pandering to the myths about free movement, that some voters simply did not believe them when they suddenly started extolling the virtues of both.

7. On teenage voters

I think it was wrong in principle to deny EU nationals and 16 & 17 year olds the right to vote. But, as well as being wrong in principle, it was also tactically foolish. 

8. On slogans

While “Brexit means Brexit” is intended to sound like a strong statement of intent it is, in truth, just a soundbite that masks a lack of any clear sense of direction.

9. On Scotland

Some will say that we also voted to stay in the UK, so we must accept the UK wide verdict. But in 2014, we voted to stay part of a UK that was a member of the EU - indeed, we were told then that protecting our EU membership was one of the main reasons to vote against independence.

10. On taking back control

To end up in a position, which is highly possible, where we have to abide by all the rules of the single market and pay to be part of it, but have no say whatsoever in what the rules are, would not be taking back control, to coin a phrase we’ve heard more than once recently- it would be giving up control.