Vickers' "electric fence" - are bankers' DIY skills up to it?

Cows, cricket, and dangerous fences.

John Vickers, the man who has laid out the plans for a redesigned  Vickers Report recommended the separation of retail and commercial activities.

Last month, having digested Vickers’ recommendations, the Parliamentary Committee on Banking Standards published its own report, advocating the “electrification” of that ring fence.

Last week, John Vickers appeared in front of the Committee to endorse the proposal. “I welcome anything that reinforces the ring fence and, in particular, I welcome this committee’s proposal to that end,” he said.

“We are now 16 months on from publication of the final report, and nothing has happened in that period which makes me doubt that ring fencing is the right structural ingredient, along with others – loss absorbency and so on – for banking reform in the UK.”

At the time the Vickers Report was published, many in the banking industry were sceptical as to whether a fence could be erected at all. Senior bankers are not known for their DIY skills… And that was before any talk of passing a current through it.

However, the solution has become generally accepted as preferable to the Volker Rule that is currently causing panic on the other side of the pond. In order to avoid similarly draconian measures being adopted here, most bankers are keeping quiet.

But one committee member, Mark Garnier MP, wanted to make sure that Vickers had faith that bankers would resist the temptation to wield the wire cutters. “Is it inevitable that banks will try and test the limits of the ring fences?” he asked. “And is there a commercial advantage in doing so?”

In response, Vickers painted a surprisingly bucolic scene. “I can’t think about this topic without reference to my own experience, in a rural cricket match a long time ago,” he reminisced. “I was on the boundary, and there were cows in the next field.

“I didn’t realise how much power there could be in an electric fence until the ball whizzed past me and I went to get it.

“Having had that experience, I wouldn’t test the boundary. In fact, I’d try and field much closer in.”

A cautionary tale that I’m sure the UK banking industry will give full consideration to. But I have my own electric fence/cricketing anecdote.

At school, our cricket pitch was surrounded by an electric fence to stop errant woodland creatures defecating on the square. It may have been effective in that aim, but did not do a great deal to prevent errant schoolboys from weeing on it. And trust me, despite YouTube evidence to the contrary, it really didn’t do anyone much harm. Indeed, in those pre-mobile, pre-internet days it passed as entertainment.

I guess it really comes down to just how much current you pass down the wire, and whose hands are on the voltage dial. Those are going to be very difficult decisions to make indeed. As admirable as Vickers’ faith in humanity is, most of the investment bankers I know would look at an electric fence as little more than a potential practical joke.

The “electrification” of that ring fence. Photograph: Getty Images

James Ratcliff is Group Editor of  Cards and Payments at VRL Financial News.

Photo: Getty Images/AFP
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Is Yvette Cooper surging?

The bookmakers and Westminster are in a flurry. Is Yvette Cooper going to win after all? I'm not convinced. 

Is Yvette Cooper surging? The bookmakers have cut her odds, making her the second favourite after Jeremy Corbyn, and Westminster – and Labour more generally – is abuzz with chatter that it will be her, not Corbyn, who becomes leader on September 12. Are they right? A couple of thoughts:

I wouldn’t trust the bookmakers’ odds as far as I could throw them

When Jeremy Corbyn first entered the race his odds were at 100 to 1. When he secured the endorsement of Unite, Britain’s trade union, his odds were tied with Liz Kendall, who nobody – not even her closest allies – now believes will win the Labour leadership. When I first tipped the Islington North MP for the top job, his odds were still at 3 to 1.

Remember bookmakers aren’t trying to predict the future, they’re trying to turn a profit. (As are experienced betters – when Cooper’s odds were long, it was good sense to chuck some money on there, just to secure a win-win scenario. I wouldn’t be surprised if Burnham’s odds improve a bit as some people hedge for a surprise win for the shadow health secretary, too.)

I still don’t think that there is a plausible path to victory for Yvette Cooper

There is a lively debate playing out – much of it in on The Staggers – about which one of Cooper or Burnham is best-placed to stop Corbyn. Team Cooper say that their data shows that their candidate is the one to stop Corbyn. Team Burnham, unsurprisingly, say the reverse. But Team Kendall, the mayoral campaigns, and the Corbyn team also believe that it is Burnham, not Cooper, who can stop Corbyn.

They think that the shadow health secretary is a “bad bank”: full of second preferences for Corbyn. One senior Blairite, who loathes Burnham with a passion, told me that “only Andy can stop Corbyn, it’s as simple as that”.

I haven’t seen a complete breakdown of every CLP nomination – but I have seen around 40, and they support that argument. Luke Akehurst, a cheerleader for Cooper, published figures that support the “bad bank” theory as well.   Both YouGov polls show a larger pool of Corbyn second preferences among Burnham’s votes than Cooper’s.

But it doesn’t matter, because Andy Burnham can’t make the final round anyway

The “bad bank” row, while souring relations between Burnhamettes and Cooperinos even further, is interesting but academic.  Either Jeremy Corbyn will win outright or he will face Cooper in the final round. If Liz Kendall is eliminated, her second preferences will go to Cooper by an overwhelming margin.

Yes, large numbers of Kendall-supporting MPs are throwing their weight behind Burnham. But Kendall’s supporters are overwhelmingly giving their second preferences to Cooper regardless. My estimate, from both looking at CLP nominations and speaking to party members, is that around 80 to 90 per cent of Kendall’s second preferences will go to Cooper. Burnham’s gaffes – his “when it’s time” remark about Labour having a woman leader, that he appears to have a clapometer instead of a moral compass – have discredited him in him the eyes of many. While Burnham has shrunk, Cooper has grown. And for others, who can’t distinguish between Burnham and Cooper, they’d prefer to have “a crap woman rather than another crap man” in the words of one.

This holds even for Kendall backers who believe that Burnham is a bad bank. A repeated refrain from her supporters is that they simply couldn’t bring themselves to give Burnham their 2nd preference over Cooper. One senior insider, who has been telling his friends that they have to opt for Burnham over Cooper, told me that “faced with my own paper, I can’t vote for that man”.

Interventions from past leaders fall on deaf ears

A lot has happened to change the Labour party in recent years, but one often neglected aspect is this: the Labour right has lost two elections on the bounce. Yes, Ed Miliband may have rejected most of New Labour’s legacy and approach, but he was still a protégé of Gordon Brown and included figures like Rachel Reeves, Ed Balls and Jim Murphy in his shadow cabinet.  Yvette Cooper and Andy Burnham were senior figures during both defeats. And the same MPs who are now warning that Corbyn will doom the Labour Party to defeat were, just months ago, saying that Miliband was destined for Downing Street and only five years ago were saying that Gordon Brown was going to stay there.

Labour members don’t trust the press

A sizeable number of Labour party activists believe that the media is against them and will always have it in for them. They are not listening to articles about Jeremy Corbyn’s past associations or reading analyses of why Labour lost. Those big, gamechanging moments in the last month? Didn’t change anything.

100,000 people didn’t join the Labour party on deadline day to vote against Jeremy Corbyn

On the last day of registration, so many people tried to register to vote in the Labour leadership election that they broke the website. They weren’t doing so on the off-chance that the day after, Yvette Cooper would deliver the speech of her life. Yes, some of those sign-ups were duplicates, and 3,000 of them have been “purged”.  That still leaves an overwhelmingly large number of sign-ups who are going to go for Corbyn.

It doesn’t look as if anyone is turning off Corbyn

Yes, Sky News’ self-selecting poll is not representative of anything other than enthusiasm. But, equally, if Yvette Cooper is really going to beat Jeremy Corbyn, surely, surely, she wouldn’t be in third place behind Liz Kendall according to Sky’s post-debate poll. Surely she wouldn’t have been the winner according to just 6.1 per cent of viewers against Corbyn’s 80.7 per cent. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.