Will we see our bankers banged up?

Do not pass GO or collect £200,000.

After five years here it is: a parliamentary report recommending bad bankers go to jail. No more bonus restrictions, enforced regulation or deferred pay; its straight to jail for senior executives who let their banks fail. Do not pass GO or collect your £200 (thousand) bonus, etc...

But how realistic is this idea put forward by the optimistically entitled report, “Changing Banking for Good”?

After one year, hundreds of interviews and 161 hours of evidence heard by an Archbishop (Justin Welby), head of the Treasury select committee (Andrew Tyrie), five MPs and four peers, The Parliamentary Commission on Banking Standards has made a number of ethical, rather than financial, conclusions. Here are some highlights:  

Too many bankers, especially at the most senor levels, have operated in an environment with insufficient personal responsibility

 One of the most dismal features of the banking industry to emerge from our evidence was the striking limitation on the sense of personal responsibility and accountability of the leaders within the industry for the widespread failings and abuses over which they presided.

"Dismal", 2responsibility" and "accountability" are all words we want to hear, but how practical are they, really?

Firstly, Andrew Tyrie, chairman of the parliamentary review, said that a prison sentence would only occur if there was “has been taxpayer support for a bank.” With pressure building on the government to sell its shares of RBS and other bailed out banks, there will probably be no "taxpayer support" by the time this becomes policy (if at all).

Then there is Tyrie’s comparison of the banking failures to Murder on the Orient Express where “everyone had some small contribution on the deaths and nobody was responsible”. Basically, with or without Miss Marple, how will you ever prove who is responsible for a bank’s failure without putting the whole management away? Building legislation to castigate one individual for a whole bank’s malpractice is going to be very hard, if not almost impossible.    

Lastly, the Treasury will not want to throw bankers in the slammer. Simply, it’s bad for our image. As Philip Augar reminds us in today’s FT, London is a global-sized financial centre in a medium-sized economy poised between recovery and recession. The City therefore needs to hold on to its competitiveness and putting bankers away is not going to look good.

While all this is gloomy pessimism for banker bashers and the likes, all hope is not lost. Even if we don’t see bankers behind bars any time soon, the threat should suffice.

Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

Getty Images.
Show Hide image

Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.