Owen Smith MP – article for the Pontypridd Observer
With brilliant, though coincidental, timing I brought some of the board of one of Britain’s biggest banks – RBS/NatWest – to Pontypridd last week. They had come to talk to me about lending to small business in our constituency and the changes that they had undertaken to try and win back business and public trust since the banking crash of 2008/9.
The conversation with them – and with some of the businesses whom they’ve successfully supported in our constituency – brought home the truth that local banking, informed about local opportunities and local challenges, is just what we need and expect in our communities. But it was also a sharp reminder, as the LIBOR and mis-selling scandals continued to reverberate from Westminster, how far removed from that simple practice of local lending and local saving our banking system has become.
Ed Miliband said this week that "if we’re going to rebuild our economy we need route and branch reform of our banks." I completely agree and I know that people in Pontypridd feel the same way. You feel that British banking has lost its way and become corrupted and mistrusted – but you also doubt that politics has the tools to do the job. You doubt that politics is big enough to take on and to bring to heel the powerful interests of the banks.
Our answer to those concerns is two-fold. One, we agree that the best way to get to the bottom of what went wrong with our banks is through a judge-led inquiry – free of the politics of Westminster. But two, we in Labour are offering solutions – practical ideas to curb the excesses of banking and to bring it back to where it belongs – at the service of the productive economy. These include setting up a Serious Fraud Office, introducing a bankers’ Code of Conduct and exploring the possibility of introducing a state-backed British Investment Bank to help our small businesses grow.
Regrettably, the government’s response to banking reform has been sluggish. Our long-standing calls for a repeat of the bank bonus tax that we introduced in 2010 have fallen on deaf ears and Chancellor George Osborne is refusing to engage constructively with European Parliament proposals that would see excessive bonuses curtailed.
As I said to the senior management of RBS/NatWest, the issues around banking reform are central to the type of society and economy that we want. Labour’s view is that banks should focus on stewardship and be part of an economy that works for all working people, not just for a powerful, privileged few.