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Labour conference: Miliband threat to break up banks Labour conference: Miliband threat to break up banks
(about 3 hours later)
  
Labour leader Ed Miliband has said that if banks do not separate their retail and investment arms, a future Labour government will "break them up".Labour leader Ed Miliband has said that if banks do not separate their retail and investment arms, a future Labour government will "break them up".
"The infection of retail banking by the culture of casino banking" had to be tackled, Mr Miliband said, as the party met for its conference in Manchester. There needs to be a return to the "best traditions of British banking", Mr Miliband said, where "banks serve the customer" not international markets.
Recommended ring-fencing of retail from investment banking had been watered down by the government, Labour said. Recommended ring-fencing of retail from investment banking had been watered down by the government, he said.
The Treasury said it was "undertaking radical reform" of the banking system.The Treasury said it was "undertaking radical reform" of the banking system.
The Vickers report into banking, launched in the wake of the financial crisis, last year recommended banks split into two parts to separate the High Street side from the riskier investment side and cut their reliance on borrowed money.The Vickers report into banking, launched in the wake of the financial crisis, last year recommended banks split into two parts to separate the High Street side from the riskier investment side and cut their reliance on borrowed money.
The coalition has already said that all of Sir John Vickers' recommendations will be implemented by 2019.The coalition has already said that all of Sir John Vickers' recommendations will be implemented by 2019.
But if Labour won the 2015 general election and major changes were not in place by then, it would legislate, the party says. But if Labour won the 2015 general election and major changes were not in place by then, it would legislate, the Labour leader said.
"Either they can do it themselves - which frankly is not what has happened over the past year - or the next Labour government will, by law, break up retail and investment banks," Mr Miliband said. 'Casino operation'
"The banks and the government can change direction and say that they are going to implement the spirit and principle of Vickers to the full. That means the hard ring-fence between retail and investment banking. As the party meets for its conference in Manchester, Mr Miliband told BBC1's Andrew Marr Show: "What I want is a country where a small business and an individual going into their High Street bank knows that that bank is working for them, not gambling with their money on the international markets. That doesn't happen at the moment.
"We need real separation, real culture change. Or we will legislate. If they don't do it voluntarily, embrace the change Britain needs, then we are going to have to do it by law." "What really worries me is that we're seeing, and we've seen over the last year, a watering down of some of the reforms that the government was talking about to try and make that happen.
Banks 'changed completely' "This is a very clear message I have for the banks: Either they sort it out themselves - so that once and for all the High Street bank is not an arm of the casino operation - or the next Labour government will, by law, split those banks up so that once again we return to the best traditions of British banking, which is banks that serve the customer."
Recent scandals over Libor interest rate-rigging and payment protection insurance mis-selling had reinforced the case for change to happen, Mr Miliband said.
The Labour leader said the government's economic strategy had failed and borrowing was increasing. He advocated raising £2bn by taxing banker's bonuses to fund jobs for young people and housing.
The Labour Party conference slogan is "Rebuilding Britain".The Labour Party conference slogan is "Rebuilding Britain".
A Labour Party statement said: "We need to rebuild High Street banking so that they back British businesses, savers can feel safe, and we get the long-term investment needed to bring the new growth and jobs in our economy. He said: "You need a different approach.
"That means High Street banks must be properly separated from casino banking." "Yes there would be cuts if we were in government, but if you make the pace of those cuts slower, if you take less money out of the economy now it will be better for our economy, better for growth, better for people up and down the country and better for getting the deficit down sustainably."
Recent scandals over Libor interest rate-rigging and payment protection insurance mis-selling had reinforced "how important it is to achieve real culture change", Labour said. If Labour were in government now, Mr Miliband said, the first budget change it would make would be keeping the 50p rate of income tax, which is due to be cut to 45p for those earning over £150,000 from April 2013.
But it went on: "While the case for change has grown, the change we are seeing has diminished. "This government is cutting taxes for millionaires by £40,000 a year," he said.
"The government has caved in to a concerted lobbying campaign to water down the Vickers proposals for the ring-fencing of High Street banks from the casino culture." A Treasury spokesman said: "The government is undertaking radical reform of the UK banking system to ensure that the mistakes of the past aren't repeated, that the taxpayer is protected and that the banks support the UK economy."
Responding to Mr Miliband's comments, a Treasury spokesman said: "The government is undertaking radical reform of the UK banking system to ensure that the mistakes of the past aren't repeated, that the taxpayer is protected and that the banks support the UK economy."
The British Bankers' Association (BBA) said: "Since the onset of the global financial crisis, banks and banking regulation have changed completely.The British Bankers' Association (BBA) said: "Since the onset of the global financial crisis, banks and banking regulation have changed completely.
"The UK's major banks have committed publicly to further change - to do whatever is necessary to restore financial stability, to play their part in economic recovery and to earn back the trust of their customers.""The UK's major banks have committed publicly to further change - to do whatever is necessary to restore financial stability, to play their part in economic recovery and to earn back the trust of their customers."
The BBA said it was currently working with the government and regulators to implement ring-fencing.The BBA said it was currently working with the government and regulators to implement ring-fencing.
It added: "The goal of everyone involved in this global banking debate is to create a stronger, more reliable banking system with a customer-focused culture. The only differences are in the remedies proposed." On Saturday Mr Miliband told a panel of voters in Manchester that the country faced an "economic emergency".
On Saturday, on the eve of his party's conference, Mr Miliband told a panel of voters in Manchester that the country faced an "economic emergency".
Among policies he has revealed so far are the replacement of Ofgem with an energy regulator which has tougher powers to ensure prices are fair and a cap on pension fund management fees.Among policies he has revealed so far are the replacement of Ofgem with an energy regulator which has tougher powers to ensure prices are fair and a cap on pension fund management fees.
He also signalled that Labour was looking seriously at replacing student fees with a graduate tax and wanted to go still further than the party's existing pledge to reduce them to a maximum of £6,000 from the present £9,000.He also signalled that Labour was looking seriously at replacing student fees with a graduate tax and wanted to go still further than the party's existing pledge to reduce them to a maximum of £6,000 from the present £9,000.