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.

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Jeremy Corbyn has lost his NEC majority - and worse could be to come

The NEC promises to be a thorn in the Labour leader's side.

Jeremy Corbyn has lost his majority on the party’s ruling national executive committee, after a longstanding demand of the Welsh and Scottish parties sees the introduction of two further appointed posts on the NEC, one each of Kezia Dugdale, leader of Scottish Labour and Carwyn Jones, the Welsh First Minister and leader of the Welsh party. 

It means that, unlike during his first year as leader, Corbyn will not have a majority on the NEC. Corbyn acquired a small majority on the party’s ruling body at last year’s Labour conference, when Community, which represents workers in steel and the third sector, was voted off in favour of the BFAWU, which represents bakers. Added to the replacement of Hilary Benn with Rebecca Long-Bailey, that gave Corbyn a small but fairly reliable majority on the NEC. (It also led to Bex Bailey, the diminutive rightwinger who sat as Youth Rep, being dubbed “Rebecca Short-Bailey” by Corbynsceptic trade union officials.) 

In practice, the new NEC is now “hung”, as Corbynsceptics sacrificed their new majority last night when they elected Glenis Wilmott, leader of the European parliamentary Labour party, as chair. Corbyn’s opponents judge that controlling the chair, which rules on procedure and interpret’s the NEC’s rules, is worth more than a majority of one. 

Divisions will hinge upon the NEC’s swing voters – Alice Perry, who is elected by councilors, Ann Black, elected by members, and Keith Vaz, the chair of BAME Labour, and the new Welsh Labour representative, appointed by Jones. Corbyn may, therefore, have cause to regret fighting quite so hard to resist the changes this time.

“All we’re asking is that we should have the same rights as Jeremy, who appoints three,” Jones told me on Monday. At an acrimonious meeting at the NEC, Jones – who has been campaigning for the change since he became leader and has already been rebuffed back in 2011 – told Corbyn that the Welsh leadership had been kept waiting “too long” for the same rights as the Westminster party. Jones, unlike Dugdale, remained neutral in the leadership race. He explained to me that “I’d expect [London] to stay out of our elections, so you’ve got to return the favour”. 

Dugdale takes a different view, and, I’m told, feels that Corbyn’s allies in Scotland have been manoeuvring against her since she became leader. She has appointed herself to sit on the NEC, where she will be a consistent vote against Corbyn.

But worse may be to come for Corbyn in the trade union section. An underappreciated aspect of Labour politics is the impact of labour politics – ie, the jostling for power and members between affliated trade unions. What happens at the Trade Union Congress doesn’t stay there, and there has long been a feeling, fairly or unfairly, that Unite – Britain’s largest trade union – throws its weight around at the TUC. 

A desire to “cut Len down to size” is likely to make itself felt in Labour.The merger of Unite with Ucatt, the construction union, takes Unite’s share of the seats on the 33-person NEC to five including the treasurer Diana Holland.  Although Unite’s total membership is larger, it affliates fewer members to the party than Usdaw, the shopworkers’ union, and the GMB do. Usdaw is a reliable block to Corbyn on the NEC and the GMB is at odds with the leadership over Trident and fracking. 

All of which means that Corbyn’s path to wide-ranging rule changes may not be as clear as his allies might wish. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.