Five questions answered on the new banking reforms

Are we right to jail reckless bankers?

The government has today said it will back most of the recommendations made by the Parliamentary Commission for Banking Standards (PCBS). We answer five questions on the plans for reform.

What key recommendations is the government planning on implementing?

The key changes are:

There will be a new criminal offence of reckless misconduct by top bankers resulting in a possible jail sentence.

If a bank has been bailed out bankers bonuses could be repayable. Bonuses are also to be deferred by up to 10 years.

If any bank breaks any rules, the burden of proof shall lie with the relevant senior bankers to show that they took all reasonable steps to stop it happening.

What recommendations are the government not taking up?

The government did not agree to employ a much tougher leverage ration for banks, limiting the total amount of loans and investments a bank can make relative to the amount of capital the bank holds in order to absorb losses on those assets.

This would ultimately toughen limits on banks’ risk taking.

Chancellor of the Exchequer, George Osborne, has decided instead to stick to the lower level agreed and set out by the Bank for International Settlements in Basel.

The government has also refused to abolish its holding company for its stakes in Royal Bank of Scotland and Lloyds Banking Group, called UK Financial Investments. It said: "UKFI is staffed by highly expert professionals with extensive experience in the banking sector".

What else has Osborne said?

Today he said: “The government is determined to raise standards across the banking industry to create a stronger and safer banking system.

“I am pleased to say that the government will implement its main recommendations. Where legislative changes are required we will amend the Banking Reform Bill which is currently before Parliament.

“Cultural reform in the banking sector marks the next step in the government’s plan to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth.”

What other changes will be made?

The Prudential Regulation Authority, which is responsible for ensuring excess risks do not build up within the banking system, will be given an extra job of ensuring competition among banks.

Is the government considering any changes in the way the Royal Bank of Scotland is handled?

The government did say it would consider the PCBS’s suggestion of splitting the Royal Bank of Scotland into a ‘good’ high street bank - that can be quickly sold back to the private sector – and a ‘bad’ bank which should be kept and existing problematic loans worked out. 

Guests listen to speeches at the "Lord Mayor's Dinner to the Bankers and Merchants of the City of London" at Mansion House on June 19, 2013. Photograph: Getty Images.

Heidi Vella is a features writer for

Photo: Getty Images
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I'll vote against bombing Isis - but my conscience is far from clear

Chi Onwurah lays out why she'll be voting against British airstrikes in Syria.

I have spent much of the weekend considering how I will vote on the question of whether the UK should extend airstrikes against Daesh/Isis from Iraq to Syria, seeking out and weighing the evidence and the risks.

My constituents have written, emailed, tweeted, facebooked or stopped me in the street to share their thoughts. Most recognised what a difficult and complex decision it is. When I was selected to be the Labour candidate for Newcastle Central I was asked what I thought would be the hardest part of being an MP.

I said it would be this.

I am not a pacifist, I believe our country is worth defending and our values worth fighting for. But the decision to send British Armed Forces into action is, rightly, a heavy responsibility.

For me it comes down to two key questions. The security of British citizens, and the avoidance of civilian casualties. These are separate operational and moral questions but they are linked in that it is civilian casualties which help fuel the Daesh ideology that we cannot respect and value the lives of those who do not believe as we do. There is also the important question of solidarity with the French in the wake of their grievous and devastating loss; I shall come to that later.

I listened very carefully to the Prime Minister as he set out the case for airstrikes on Thursday and I share his view that Daesh represents a real threat to UK citizens. However he did not convince me that UK airstrikes at this time would materially reduce that threat. The Prime Minister was clear that Daesh cannot be defeated from the air. The situation in Syria is complex and factionalised, with many state and non-state actors who may be enemies of our enemy and yet not our friend. The Prime Minister claimed there were 70,000 ground troops in the moderate Free Syrian Army but many experts dispute that number and the evidence does not convince me that they are in a position to lead an effective ground campaign. Bombs alone will not prevent Daesh obtaining money, arms and more recruits or launching attacks on the UK. The Prime Minister did not set out how we would do that, his was not a plan for security and peace in Syria with airstrikes a necessary support to it, but a plan to bomb Syria, with peace and security cited in support of it. That is not good enough for me.

Daesh are using civilian population as human shields. Syrians in exile speak of the impossibility of targeting the terrorists without hitting innocent bystanders. I fear that bombing Raqqa to eliminate Daesh may be like bombing Gaza to eliminate Hamas – hugely costly in terms of the civilian population and ultimately ineffectual.

Yet the evil that Daesh perpetrate demands a response. President Hollande has called on us to join with French forces. I lived in Paris for three years, I spent time in just about every location that was attacked two weeks ago, I have many friends living in Paris now, I believe the French are our friends and allies and we should stand and act in solidarity with them, and all those who have suffered in Mali, Kenya, Nigeria, Lebanon, Tunisia and around the world.

But there are other ways to act as well as airstrikes. Britain is the only G7 country to meet its international development commitments, we are already one of the biggest humanitarian contributors to stemming the Syrian crisis, we can do more not only in terms of supporting refugees but helping those still in Syria, whether living in fear of Daesh or Assad. We can show the world that our response is to build rather than bomb. The Prime Minister argues that without taking part in the bombing we will not have a place at the table for the reconstruction. I would think our allies would be reluctant to overlook our financial commitment.

We can also do more to cut off Daesh funding, targeting their oil wells, their revenues, their customers and their suppliers. This may not be as immediately satisfying as bombing the terrorists but it is a more effective means of strangling them.

The vast majority of the constituents who contacted me were against airstrikes. I agree with them for the reasons I set out above. I should say that I have had no experience of bullying or attempts at intimidation in reaching this decision, Newcastle Central is too friendly, frank, comradely and Geordie a constituency for that. But some have suggested that I should vote against airstrikes to ensure a “clear conscience” ’. This is not the case. There will be more killings and innocent deaths whether there are UK airstrikes or not, and we will all bear a portion of responsibility for them.

A version of this article was originally sent to Chi Onwurah's constituents, and can be read here