Just how many banks do we need?

Creating more banks is not necessarily the answer.

According to Greg Clark, financial secretary to the Treasury, the current number of banks in the UK is unacceptable. Says Clark: “we need more banks.” The co-founder of Metro Bank, Anthony Thomson, is singing from the same song sheet. Speaking at a conference last week, Thomson forecast that we will see between five and 15 new banks over the next three to five years. Let’s get real. There are immense barriers to setting up a new bank – as indeed there should be. If we witness two or three new banks over the next three years up and running, that would be a result.

Love them or loathe them, Tesco is one of the world’s most successful retailers, if you forgive it their disastrous foray into the US and the millions lost on its Fresh & Easy project. Even Tesco has found the launch of a current account product in the UK a major challenge. For the past year or more, Tesco has been working on rolling out a current account. We are still waiting to see what the Tesco Bank current account will look like. And this from a banking unit with deep pockets and led by Benny Higgins, arguably one of the leading retail bankers of his generation.

There are currently 17 separate providers of current accounts in the UK. The Tesco Bank launch, slated for the third quarter, will take us to 18. Additional competition is also coming from Bank of Ireland; it is to run three current accounts on behalf of The Post Office. The Post Office is currently trialing its new current account products across 29 branches across Essex and East Anglia ahead of a nationwide launch.

Within government, there seems to be a belief that making it easier for new banks to launch will somehow improve standards as a result of an increase in competition. What the country certainly could with is more responsible banks….an increase in innovation, perhaps. More transparent pricing would help for a start.

If the banks are really to serve the economy, the government has no option but to ensure that they are well -capitalised banks: by its nature, the need to be well capitalised will make it more difficult for new entrants to launch. The argument that we simply need more banks seems to this writer to be not proven.

 

Douglas Blakey is the editor of Retail Banker International

Photo: Getty
Show Hide image

What are Len McCluskey's chances of re-election at Unite?

The union boss's re-election bid will have far-reaching consequences for the Labour party. 

Len McCluskey has stepped down early as general secretary of Unite, Britain’s largest trade union, in order to stand again for a third term. The contest has potentially far-reaching consequences for the Labour party. McCluskey was elected in 2013 to serve a five-year term; but his supporters hope that the move will allow him to stay in post until the next general election. 

Unite, as well as being Britain’s biggest trade union, is the largest affiliate to the Labour party. That makes it a power player in the party’s internal politics, although their reach and influence is often overstated. It is the GMB, a trade union from the party’s centre, which has dominated parliamentary selections so far in this parliament. “It’s easier for people who’ve met Lisa Johnson [the GMB’s political officer in charge of selection] once in the pub to get selected than it is for Len to get his favourites in,” jokes one trade union official.

That McCluskey is going now and not in 2018 is itself the result of events beyond his control. Assistant general secretary Steve Turner, long spoken of as McCluskey’s chosen successor, is judged not to have  the credibility with Unite’s left flank to win. McCluskey, who is 66, had been trying to overturn a rule barring him from standing again in 2018 due to his age. However, that plan has been mothballed after it became apparent that he does not have the necessary votes among the executive committee.

McCluskey has been dogged by the widespread perception – one that Unite’s press officers strongly deny – that his preference in the 2015 Labour leadership election was Andy Burnham, not Jeremy Corbyn. (In the end, Unite backed Corbyn.)  That matters because in 2013, McCluskey’s strongest opposition came from the left, in the shape of Jerry Hicks, a member of the Respect party who has tried for the top job three times. Since then, McCluskey has been a vocal supporter of Corbyn’s leadership and Unite underwrote much of the Islington MP's second leadership bid. But the perception that he is a fairweather friend of the Corbyn project still lingers in some circles.

However, McCluskey is unlikely to face a well-organised challenge from the left, which would potentially be fatal. 

Who might face him? Hicks is believed to be highly unlikely to mount a fourth bid for the job, while Sharon Graham, the director of organising, is “ambitious but will sit this one out”, say insiders. It is expected that someone from Unite Scotland will likely make a bid. The great hope for Labour’s Corbynsceptics is Gerard Coyne, the regional secretary in the west Midlands. Allies of McCluskey hoped he could be bought off with a parliamentary seat, but he is now all-but-certain to challenge McCluskey for the post.

McCluskey is well-prepared for his bid. Jennie Formby, a close aide and former political director, now serves as regional secretary in the South-East, in preparation for the crucial task of getting the vote out for her boss. He starts as the frontrunner, albeit a vulnerable one. Coyne, for his part, has the advantage of coming from the West Midlands, where the old Labour right – once the backbone of Amicus and its predecessor unions, now merged into Unite – is still strong and relatively well-organised.

But here's the question. Has McCluskey's friendliness with the Corbynite left alienated his members with high-paying industrial jobs, who are not enamoured with the current Labour leader? McCluskey’s allies hope that he has done enough in defending Labour’s policy commitment to Trident to offset his support for Corbyn, who is opposed to the nuclear deterrent. His opponents believe they can successfully link him to the Labour leadership’s opposition to fracking, pharmaceuticals and defence, all of which are industries whose members are represented by Unite.

This election matters within the Labour party because Unite has multiples votes on its ruling national executive committee, and on the conference floor. It is also keen to put forward Unite-backed parliamentary candidates. So whether Len McCluskey serves another term could change the direction of British politics. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.