Ed Miliband to call for banking competition inquiry
A Labour government would tell regulators to investigate whether there is adequate competition between High Street banks, the BBC understands.
Ed Miliband is due to say on Friday that the authorities should look into whether breaking up banks would benefit customers.
Should the Treasury approve big banker bonuses?
Funny really…Miliband wants to know what the ‘authorities’ think about capping retail bank’s market share….and the Treasury provides the answer…Miliband is a fool basically…and the BBC ignores it…
Mark Carney rejects Ed Miliband’s bank shake-up plan
The Governor of the Bank of England has rejected Ed Miliband’s plans to shake up the UK banking industry.
In a blow to the Opposition leader’s attempt to appear tough on big business, Mark Carney dismissed plans to break up the UK’s biggest banks and questioned whether caps on bonuses were the right to way control pay.
Appearing before the Treasury select committtee, Mr Carney said it was a cap on retail bank market share in the US which had, in part, fuelled the large Wall Street banks which were at the heart of the global financial crisis.
Labour’s proposals to limit market share were also rejected by Lord Lawson, former Chancellor and member of the Parliamentary Commission on Banking Standards, who said: “I think there are probably enough domestic banks for there to be competition.”
‘A blow to Miliband’s plan’…..why would the BBC ignore that?
Also frontpage in the FT (£):
Carney deals blow to Labour bank plan
Where oh where is the BBC report?…the BBC being the biggest news provider in the UK if not the world.
Competition?
The BBC gives us this list of banks implying a miniscule market:
On Friday, Mr Miliband is expected to say that forcing the major High Street banks to sell off branches would promote the growth of new firms able to challenge the dominance of the “big five” – RBS, HSBC, Lloyds, Barclays, and Santander.
“We’ve got to give customers more choice,”
The big five?
What about the Halifax, or the Co-op, or Tescos, or Sainsburys, or Standard Chartered, or Clydesdale? The Post Office has a basic banking service as well….amongst numerous other smaller banks.
As with the energy companies which despite there being a ‘big six’ numerous smaller companies provide an alternative supply…as Miliband knows because he switched to one of them himself, the banks also provide more than enough competition.
The Post Office is one of several “challenger” banks vying to break up the UK’s highly concentrated banking sector by offering a current account, considered the cornerstone of a bank’s relationship with customers.
These providers have stepped up their plans to launch accounts following the introduction of a new switching service, which enables customers to move their current accounts within seven working days.
Tesco declared at the end of last year that it would start providing current accounts in the first half of 2014. The retailer plans to offer rewards to banking customers, using its existing Clubcard points system.
Virgin Money, which took over parts of Northern Rock, also aims to launch current accounts early this year, starting with a basic account aimed at people who do not have a bank account.
Another bit of tilting at windmills to generate headlines by Miliband and his spinners.
And oh yes:
In 2009, the Labour government attempted to create a new “people’s bank” through the Post Office, but the plans were scrapped a year later after they were deemed too expensive.
Shame the BBC regurgitates it all without question once again.
The BBC rubbish aside, this is dangerous territory for politicians. So lets presume you break up the big banks. I bank at my local branch of ‘big bank Plc.’ – in a rural town with only two banks. I have a limited choice but I’ve made that choice and have long standing relationship with my bank, for both business and personal purposes.
So my branch is decided to be one of the ones that has to be sold. I am then forced to move to the back that takes the branch on – I cannot refuse, all I can do is shut my account. I’m not allowed to move it internally to the nearest branch because in the past this has been stopped by regulators.
And even if I can, that branch is 20 miles away, and the staff I have no relationship with. 20 years of good customer relations down the drain – I have to start again with a new bank, probably the competitor across the street from my old branch that I avoided for 20 years has now become the lesser of two evils.
Is there more competition in my local market? No – still just two banks, but now two banks I don’t want to deal with.
But the BBC aren’t telling us that – suddenly, after a day of telling us competition is bad in the NHS, it’s great in the banks.
The BBC pontificating on customer choice! Surely you shouldn’t throw stones when you live in a glass house. What choice do consumers get in the TV/Radio industry? Lets have a state bank that we all pay £147 pa to whether we use it or not and see how the other banks fare.
I believe it’s much more important for the Liebour party to investigate the effect lack of competition has on the retail sector, with 6 big supermarkets controlling prices, suppliers, and turning a very healthy profit.
Millipede talks about all kind of costs of living, but rarely mentions supermarkets as being a major part of the problem, even when they account for a households largest spend.
There were suggestions of a ‘supermarket tax’ which was dropped by all the main parties a while ago.
Perhaps it might have something to do with David Sainsbury being the 4 largest donor to UK political parties having given more than £15 million over the past 10 years.
Or perhaps the Co-operative group another Labour contributor?
Or maybe the amount which Tesco gave to the Labour party during the BLiar years? (Tesco supports the party in power). Or the closeness to Labour: “in the late 1990s Tesco executives featured on six government task forces, more than for any single company and far more than the other supermarket chains. These included Terry Leahy, who sat on the Board of Trade’s Competitiveness Advisory Group”.
Asda Walmart is too big for Labour to take on, although they should! Described as the most ruthless employer on the planet it unbelievably pays its workers so little that it runs its own food bank for them! Despite the fact that 5 of the family are in the top ten wealthiest people on the planet. It also has a total disregard for the rights of it’s workers and is constantly involved in litigation as a result.
“Its expansion has been phenomenal. A so called ‘strategy of consolidation’ smashes local small town businesses, often leaving inhabitants without alternative local retailing outlets.”
So a popular soft target which can’t fight back, but won’t achieve anything meaningful for voters, or an attack on a sector which can & will bite back and gives considerable funding to the Labour party, but a campaign which would benefit more people than almost any other, and nothing is done!
No prizes for why Millipede chose to attack the banks !
Not that your rant has anything to do with BBC bias but since when has that stopped recent commenters on this site hijacking it to pursue their own agenda (and, yes, I’m also guilty of that from time to time)?
In this case, as usually happens, the BBC is manifestly part of the Labour “team”. Starting with the rubbish from Miliband in the Telegraph masquerading as a proposal for a Labour “rescue” for the middle classes from the predations of the coalition, the BBC bigged this up (as the number one item on the “news” that morning) and continues to relay Labour party policy (as “news” as well as favourable interviews/comment) all this week. Whether or not Labour is right to deal – or not deal – with food distribution in the UK is up to Labour. However, whatever Labour chooses to deal with is fine by the BBC since it is, after all, a transmission belt for approving views on Labour policy in all areas.
Coming to your comment: given your implied call for a Food Retail Control Authority, it seems that you are more socialist and statist than Labour. I didn’t realise that you were actually in favour of “control” regimes like the one imposed on the BBC. Oh yes, a UK Food Retail Trust would certainly solve the worries of workers in mid-America (or mid-Britain) paid low wages by Walmart. Moreover, such an organisation would be perfect at providing well-paid, taxpayer-funded jobs for the same incompetent bien pensant parasites who infest the BBC Trust and the various financial service and other oversight “authorities”.
The reason large supermarket chains in the UK could be accused of making “super profits” is two-fold: they generally compete on “service” rather than price (eg why do their share prices suffer from time to time on rumours of an outbreak of price competition?) and their profits (and lack of competitive verve) are boosted by the way the supermarkets play the planning control system in the UK.
US supermarket organisations – including Walmart – generally have lower gross margins (and lower earnings/turnover ratios) than the UK ones because they actually compete on price and because planning controls (such as they are in the US) have little impact on the ability of competitors to establish themselves physically in competion. Moreover, the failure of Tesco (at a cost of £1 billion) to establish a foothold in the US evidences the casualty rate – the creative destruction – (to the benefit of the consumer) caused by genuine competition. Unfortunately, severe price competition in the US is reflected in the relatively low wages of unskilled workers in all the supermarkets not just Walmart. Unsurprisingly, it’s highly probable that illegal immigration of unskilled labour into the US probably plays a role in that metric.
I’m no particular fan of Tescos and Sainsbury and the others. Their continued refusal to compete genuinely on price (except at the margins of their product offerings) is scandalous. However, the imposition of a supermarket “regulator” would convert a relatively minor irritation into a fatal disease (cf Venezuela). OTOH it’s something that – Labour policy or not – would find favour at Broadcasting House.
Yes, we should break up the banks. Make them sell branches to the errrm Co-op Bank. Oh, hang on ……………
The phrase “the BBC understands…” has come to mean that the Labour Party has a notion that they want proof tested in a public environment, see what the reaction is before they convert into formal policy. A kind of massive focus group if you like.
On the subject of the banks, it is long due for people in public places to start being honest about what they want from them. One admirable ambition is that they want banks to lend more to small businesses.
Well great, but how does that sit with an increasing regulatory atmosphere whereby the banks are being requested to allocate greater proportion of capital to cover potential losses. Also, how does it sit with the the need for banks to shrink the size of their balance sheets? (RBS has massively shrunk its balance sheet over the last 5 years – Miliband desperately needs to keep up).
It doesn’t, these three things are simply not compatible.
Then there is the suggestion that selling branches increases competition- well it doesn’t. Who would buy all these excess branches? It is not possible to just set up a bank- quite rightly, an applicant needs to jump through all kinds of hoops to get a banking licence and anyway, with increasing customer numbers moving online, that is where the future of banking lies. I don’t suppose I represent the average individual in this respect, but I seriously cannot recall the last time I went into a bank, I mean actually walked inside a branch.
Miliband is just trying to leverage people’s views and ignorance of the workings of the banks for his own political ends.
I myself have completely forgotten what Labour did over their thirteen years.
In anybodys book, the worst collection of politicians, rulers and policy advisers and executives in the history of this country.
The Frankfurt Third Way Church of DemonEyes managed to crash daddys car, get him rendered by the Guardian and serve him up with horsemeat at Mid-Staffs…with no attempt to look at the processing that occured.
They crashed the car, left the keys in; torched it-and now pour scorn, petrol..throw bricks and monkey shit at even the old Rotary St Johns bunch of wardens that try to mention it .
Let alone try to toast an old muffin at the flames like the Oxbridge Tory Nice-but-dims who reckon that Labour were alright really.
Yes-thirteen years, I have no knowledge of the manes, the scandals, the deaths, the destruction of out very society at its fundamentals…we `re all Tracy Temples these days.
And all the media hope is that we`ll remember Shirley had some lollipops to bribe us with…and Jimmy Savile`s not about to worry us in that way now, thank Marx/Allah!
I’d like to see the banks regulated, especially when it comes to bonuses. Do I trust Milibland or anyone in Labour to do anything about it, or even anything greater than what the current government is doing? No – 13 years of seeing them do absolutely nothing (or, worse, ENABLE them via public bailouts etc) means that any chance they had of ever convincing anybody with any sense that they represent the people is gone, as if it hadn’t dissipated anyway with their social engineering and mass immigrant influx for purely political/vote increasing reasons as opposed to public benefit.
Even Charlie Brooker won’t support Milibland. On Weekly Wipe he said about a public appearance Mr Ed made that “they couldn’t believe they were looking at a future Prime Minister, because they weren’t. Miliband’s a bit like Nelson Mandela, sadly irrelevant in 2014.” When even Brooker won’t humour you as leader of the Labour party, you need to make your living elsewhere.
“A Labour government would tell regulators to investigate whether there is adequate competition between High Street banks, the BBC understands.”
Yes, and you could call it the, Financial Services Authority (FSA). What a wonderful idea, why didn’t anyone else think of this before ?
As mentioned above, Red Ed is in dangerous territory. He seems to be trying to find things which annoy people and basically coming up with ‘policies’ (sic) to gain votes. You would expect a journalist to really go over him on some of the rubbish this man comes out.
There are over 100 banks incorporated in the UK (A list was posted on the Guardian Website under a similar article about Red Ed) not to mention an unknown number incorporated elsewhere who trade in the country.
Plenty of options if they want to go into retail banking.
(If they don’t want to go into retail banking it is because the profits aren’t worthwhile at the moment – so it is difficult to see how ‘increased competition’ would persuade others to enter.)
There has been no operational profit in retail banking for a long time – in terms of banking activity all bank profits these days comes from International and Wholesale banking activity.
The BBC have been at the forefront of bank-bashing for quite some time, with some (often) quite ignorant reporting. The ignorance of some of their reporters, some of whom don’t know the difference between retail and wholesale banking is quite astounding.