Peter Oborne appearing on BBC News to discuss the HSBC tax story.
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Peter Oborne blows the whistle on the Telegraph

The former chief political commentator says the paper increasingly commits “a form of fraud on its readers” by suppressing or downplaying stories, such as the HSBC tax avoidance scandal.

Newspapers have a problem: their sales of printed copies are falling sharply as readers migrate online. And because most readers refuse to pay for website access, papers increasingly rely on advertising revenues, online and in print, to stay in business. Even the Guardian website runs articles sponsored by management consultancies, insurance, travel, motor and other companies, as well as “partner zones” set up with the likes of Visa and Unilever. But although editorial executives sometimes struggle against commercial pressures to blur the boundaries between genuine features and those generated by corporate advertisers, the Guardian has so far managed to prevent its paymasters from interfering with news coverage and editorial comment.

Not so the Telegraph, according to Peter Oborne, its chief political commentator, who has resigned in an explosion of anger. On the openDemocracy website, he accuses the Telegraph of running news stories solely to please big-spending advertisers such as the Cunard shipping line. Worse, in what he calls “a most sinister development”, he says the Telegraph increasingly commits “a form of fraud on its readers” by suppressing or downplaying stories, such as the HSBC tax avoidance scandal and Tesco’s false accounting, that reflect badly on big advertisers.

Oborne, though politically on the right, is a brave and independent-minded journalist who takes on such difficult targets as the pro-Israel lobby’s influence on British policy in the Middle East. We frequently hear about the potential dangers to press freedom from state regulation. But an equal, perhaps greater, danger comes from corporate advertisers. Oborne, in a rare example of whistleblowing from within the news­paper industry, has rightly put the subject in the public arena.

But in one respect, Oborne’s 3,000-word article for Open Democracy is disingenuous. He says he joined the Telegraph five years ago because it was “the most important conservative-leaning newspaper in Britain”. But it has long since ceded that title to the Daily Mail – which gave sustained coverage to the HSBC and Tesco scandals – and as long ago as 2006 the Guardian ran a feature on the Telegraph headlined “The dizzying decline of a great paper”. Besides, the Telegraph, even in its heyday, disliked journalistic muckraking. Its editors argued that to expose the failings of national institutions risked undermining confidence in the established order and creating social instability. The former Sunday Telegraph editor Peregrine Worsthorne once said: “It is a very worrying development when journalists see their only function as . . . pointing out what’s wrong with the country.”

Peter Wilby’s First Thoughts column appears weekly in the New Statesman magazine. Get your copy

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation