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| Ed Miliband urges bank branch sell-off to tackle 'broken' market | |
| (about 1 hour later) | |
| The UK's five largest banks are too powerful and should be forced to give up "significant" numbers of branches, Labour leader Ed Miliband is to say. | |
| He will argue financial services have been "an incredibly poor servant of the real economy" for decades and should be "serving" the needs of small business. | |
| A Labour government would "turn the tide" by creating two "challenger" banks to boost High Street competition. | |
| But the Conservatives said Labour's policies were "all over the place". | |
| The "big five" banks - HSBC, Barclays, RBS, Santander and Lloyds Banking Group - account for the majority of bank customers and lending. | |
| In his speech at the University of London, Mr Miliband will liken the "broken" banking system to the energy market, claiming "too much power is concentrated in too few hands" and this has had a detrimental effect on enterprise and jobs. | |
| A Labour government, he will say, would instruct the Competition and Markets Authority to report within six months of the May 2015 general election what the limit on a bank's market share should be and the timetable for any sell-off of branches, which should be completed by 2020. | |
| 'Reckoning' | 'Reckoning' |
| He will say: "Of course, financial services are an important industry in itself. But for an industry that calls itself a 'service', it has been an incredibly poor servant of the real economy, not just since 2010 - or 2008 - but for decades in this country. | He will say: "Of course, financial services are an important industry in itself. But for an industry that calls itself a 'service', it has been an incredibly poor servant of the real economy, not just since 2010 - or 2008 - but for decades in this country. |
| "We need a reckoning with our banking system, not for retribution, but for reform." | "We need a reckoning with our banking system, not for retribution, but for reform." |
| Mr Miliband will add: "If we carry on as we are, we will end up stuck with the same old banks dominating our high street: the old economy. | |
| "In America, by law, they have a test so that no bank can get too big and dominate the market. We will follow the same principle for Britain and establish for the first time a threshold for the market share any one bank can have of personal accounts and small-business lending." | "In America, by law, they have a test so that no bank can get too big and dominate the market. We will follow the same principle for Britain and establish for the first time a threshold for the market share any one bank can have of personal accounts and small-business lending." |
| Labour would also introduce a new National Credit Register for small and medium-sized businesses, to increase competition and improve lending to small business by allowing all banks access to comprehensive data on their credit histories. | Labour would also introduce a new National Credit Register for small and medium-sized businesses, to increase competition and improve lending to small business by allowing all banks access to comprehensive data on their credit histories. |
| Bank of England Governor Mark Carney said earlier this week that he supported the view that a cap on banks' market share "would not result in substantial improvement to competition". | Bank of England Governor Mark Carney said earlier this week that he supported the view that a cap on banks' market share "would not result in substantial improvement to competition". |
| 'Labour's recession' | 'Labour's recession' |
| He told the Commons Treasury Committee: "Just breaking up an institution doesn't necessarily create or enable a more intensive competitive structure." | He told the Commons Treasury Committee: "Just breaking up an institution doesn't necessarily create or enable a more intensive competitive structure." |
| But Mr Miliband will say: "This is not about whether we should have new banks... but about how... | But Mr Miliband will say: "This is not about whether we should have new banks... but about how... |
| "It is not about creating new banks that control some tiny proportion of the market, but new banks that have a substantial proportion and can compete properly with existing banks. | "It is not about creating new banks that control some tiny proportion of the market, but new banks that have a substantial proportion and can compete properly with existing banks. |
| "And we are not asking whether existing banks might have to divest themselves of a significant number of branches. We are asking how we make that happen." | "And we are not asking whether existing banks might have to divest themselves of a significant number of branches. We are asking how we make that happen." |
| Shadow business secretary Chuka Umunna acknowledged that Labour's plans could cause share prices of banks - including RBS and Lloyds, which are part government owned - to fall. | Shadow business secretary Chuka Umunna acknowledged that Labour's plans could cause share prices of banks - including RBS and Lloyds, which are part government owned - to fall. |
| "I'm not denying in the short term that you may see a hit on the share price of these banks, it's probably happening as we speak now," he said on BBC Radio 4's Today. | "I'm not denying in the short term that you may see a hit on the share price of these banks, it's probably happening as we speak now," he said on BBC Radio 4's Today. |
| "But the reason we're doing this is so that we can grow our small businesses, which not only create in and of themselves more middle income jobs, so we actually get people earning more, but also they're very important feeders in the supply chain for our larger businesses." | "But the reason we're doing this is so that we can grow our small businesses, which not only create in and of themselves more middle income jobs, so we actually get people earning more, but also they're very important feeders in the supply chain for our larger businesses." |
| Asked about Mr Carney's remarks, he said the bank governor should not be dragged into political matters and suggested he had only expressed his view after being asked a "leading question" by a Conservative MP. | |
| 'Labour mess' | |
| For the Conservatives, Treasury minister Sajid Javid said people in the UK had been "made poorer by the worst recession in a century - a recession caused by the Labour government that Ed Miliband was at the heart of. So Ed Miliband is complaining that his own mess isn't being cleaned up fast enough." | For the Conservatives, Treasury minister Sajid Javid said people in the UK had been "made poorer by the worst recession in a century - a recession caused by the Labour government that Ed Miliband was at the heart of. So Ed Miliband is complaining that his own mess isn't being cleaned up fast enough." |
| He added that the Labour leader was "all over the place" and had "no credible economic plan". | He added that the Labour leader was "all over the place" and had "no credible economic plan". |
| But Business Secretary Vince Cable said he agreed with Mr Miliband, adding: "We do need more competition. We've been very badly served in the past." | But Business Secretary Vince Cable said he agreed with Mr Miliband, adding: "We do need more competition. We've been very badly served in the past." |
| Speaking on BBC Two's Newsnight he said: "Many of the things he's calling for have actually happened. | Speaking on BBC Two's Newsnight he said: "Many of the things he's calling for have actually happened. |
| "What his proposals don't clearly indicate is exactly what kind of bank is he trying to create?" | "What his proposals don't clearly indicate is exactly what kind of bank is he trying to create?" |