PMQs sketch: Cameron gets pulled back into the doldrums

Miliband decided to split the torture in two today.

One of the great mysteries of modern politics is how the leader of the Labour Party manages to smuggle a sharp pointy stick past Commons security every week to poke the Prime Minister. Ed produced it with his usual flourish just after noon today and proceeded to chase Dave around the dispatch box for the 30 minutes of the fun known to regulars as Prime Minister's Questions.

We all know the PM has been in the doldrums since the Chancellor produced THAT budget six months ago, but each week he hopes to recover. In fact, so good, relatively speaking, were last week's economic indicators that he had high hopes this would be his week. But such is the disarray within Tory ranks the every time he thinks he's about to climb out of the smelly stuff one of his own pulls him back in again.

You could tell treachery was afoot by the volume of support he got from his own side during today's spat with Ed Miliband over that most unifying of party policies - Europe. The latest row is over a planned increase in the EU budget, which has Tory sceptics snarling and ready to force a vote this evening demanding it be cut instead. Spotting this passing bandwagon, Labour climbed on board leaving Dave, as Ed was happy to point out, with only his embarrassment to keep him warm.

With Ed and his cohorts ready to join Tory rebels in the lobby this evening, the sound of support for the PM from those who intend to vote against him doubled in decibels, leading Speaker Bercow to call for calm. But there was even more pleasure on the opposition benches as the Speaker took his own opportunity to remind Dave that PMQs were not questions from the PM but for him."I've told him ten times," he said as Dave slumped in his seat.

Normally, Ed takes his full six questions to turn the screw as tightly as possible on the PM, who seems to have abandoned any attempt to hang on to his temper. But he decided to split the torture in two today, leaving Dave sweating over the second bout as he paid lip service to MPs whose questions filled the gap. To Labour's great pleasure, the day had begun with another clash between the coalition partners over energy policy. Just last week, the Lib Dem Energy Secretary, Ed Davey, had gone into a major sulk when Dave announced plans for energy companies to give everyone the lowest tariffs - although he didn't really mean it. 

Well, Davey had his bottom lip way out again today when one of his Tory juniors appeared to announce the end of the Lib Dem plan for renewable supplies by sticking a wind farm on every street corner. What was the policy, demanded Miliband, and none of your business was the reply. But even Dave knew this was merely another pre-lunch taster on the way to the main course.

Six months ago, when Chancellor George was still in the game, he commissioned Michael Heseltine to take a look at the economy in a move intended to demonstrate his confidence in criticism. And so it was with some pleasure that Miliband read out this paragraph from Lord Hezza's conclusions: "The message I keep hearing is that the the UK does not have a strategy for growth and wealth creation."

George stared off into the space reserved for those who have uttered the immortal phrase, "beam me up Scotty", only to find out it does not work. By now, the volume button had been turned up so high that the Speaker uttered the dire warning that if it continued they would be kept back after class. The thought of being late for lunch clearly worked, and MPs headed off to work out how to vote on Europe later. Dave looked like someone planning a sandwich at his desk.

David Cameron poses on the door of number 10 Downing Street after buying his remembrance poppy from army officers. Photograph: Getty Images.

Peter McHugh is the former Director of Programmes at GMTV and Chief Executive Officer of Quiddity Productions

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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