Labour must take the lead on extending competition in the banking sector

by Callum Anderson

With a little under a year until the 2015 general election, Labour is marginally ahead of the Conservatives in most polls, yet Ed Miliband continues to trail the prime minister on the issue of leadership and the two Eds still lag behind the prime minister and the chancellor on who people trust to run the economy and, in particular, who will best secure the public finances.

Indeed, as is agreed by most people, it is the economy, and how the two main parties intend on developing it over the next five years, that will dominate the political discourse over the next twelve months.

Now, whilst the public finances are quite reasonably the fundamental dividing lines between Labour and the coalition government, it is essential that other issues surrounding the cost of living crisis are also not ignored: rising energy prices, the shortage of affordable housing, to name just a few examples.

But there is another strand of this debate that is sometimes overlooked: the provision of basic financial products –a bank account, access to fair and affordable credit –that are, quite simply vital to everyone across the country if they are to participate fully in the UK economy.

The Community Investment Coalition (CIC) this month launched its Community Banking Charter states these basic financial products that every adult, household and business in the UK should have access to the following:

  • A basic transactional bank account;
  • A savings scheme;
  • Credit;
  • Physical access to branch banking facilities;
  • Insurance; and
  • Independent money management advice.

Everyone, regardless of party affiliation, will agree that these six elements are not excessive. Without access to these basic products, millions are been prevented them from participating fully in the economy. Add this grim reality to the coalition government’s calamitous rolling out of Universal Credit, and you have a situation where it is extremely difficult for people to escape poverty.

The UK has made real progress in ensuring that most adults have some form of bank account, with just 3 per cent not having one. This is broadly in line with our key European neighbours Germany and France and Slovenia, and compares extremely favourably with others such as Poland (30 per cent without access to a bank account) and Italy (29 per cent).

However, whilst 3 per cent may not sound like a lot, this still amounts to some three million Britons, who are effectively financially excluded by a lack of access to services as vital as food and shelter.   And access to other types of financial tools remains patchy.  59 per cent of UK households have savings of less than £5,000 and 56 per cent of the poorest households do not have home content insurance.

These figures make for grim reading, but, at the same time, herein lies an excellent opportunity for Labour to offer strong leadership on an issue. Some progress has already been made by Labour. Speaking last yearat the British Chamber of Commerce’s annual conference, Ed Miliband publicly came out in support of local regional banks, similar to the German Sparkassen  – banks which have contributed heavily to the diversification of the German banking sector and development of local economies there. Similarly, shadow business secretary Chuka Umunna has made promising noises about the German Sparkassen, pledging to deliver for more than the incumbent business secretary.

So, there is no doubt that Labour is moving in the right direction.

There is no doubt that Labour must be bold, yet pragmatic, in the alternative it offers the UK electorate. By taking a lead on this issue –taking radical policy positions in broadening competition in the retail banking sector –One Nation Labour will show that it understand the need to move beyond merely ‘bashing bankers’by increasing taxes on bonuses, and, perhaps most importantly, demonstrate how it will intends to improve the lot of Britain’s most vulnerable citizens.

Callum Anderson works at a national charity

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13 Responses to “Labour must take the lead on extending competition in the banking sector”

  1. Bernie Evans says:

    Michael Meacher in the Morning Star recently and correctly criticised the Blairite faction for its constant criticism of Miliband`s leadership,”spitting out its vitriol and bile”.(Morning Star;23/06/14) The failure of the likes of Mandelson to go public in outright support for the leader of his party, when the general election is looming ever nearer, and when a divided party is the last thing Labour and its supporters need, is inexcusable. However, Miliband has got his work cut out if he is to win, not so much because of Blairite treachery, but because he is failing to provide, or give the impression that he can provide, the country with the strong government it seems to require.
    Thatcher certainly won over many voters with her strident personality, and her pledge to dominate the Cabinet; the “vegetables” joke was symptomatic of that domination! Churchill, despite his racism, his history of putting down the working people, not to mention his misogyny, won elections because no-one believed he could not provide what he wanted.Other leaders have shown exactly the opposite tendency, and have floundered come election time. In football, the strong managerial style of Ferguson won the begrudging respect of most fans, envious of the effort of his players, fearful of incurring the wrath of the boss. There was never a chance of him “losing the dressing-room”, but whether Miliband has is more of a moot point!
    People are hugely in favour of Miliband`s brave attacks on the energy companies, but few think he can carry out his threat to freeze energy prices. Is it because he seems too “weird”, as the right-wing press repeatedly say, or does the problem lie with the presentation of the policies? He even began a recent speech with the word “Friends”, emulating a successful tactic of FDR`s in the 30s, so why is he not gaining the credibility accorded to the American president? Do his cabinet colleagues sound as though they not only agree with Miliband`s policies but were involved in their origin?
    What does Miliband need to do? Strong leadership is usually signified by sackings, and there are certainly some people in the shadow cabinet who need demoting for their lack of loyalty, and some, like Tristram Hunt, who are alienating the very support they were presumably appointed to regain.
    He can also denounce some of the Blairite claims as the nonsense they are, the Blunkett “fifteen years in the political wilderness”, for instance; describing the impoverished Britain of 2020, devoid of the NHS and welfare state as we know them, that would exist after five years of Tory mis-rule, would do the trick.
    A third solution would for policies to be less compromising in nature; nothing smacks of dithering leadership more than proposals which are neither radical nor conservative, whilst attempting to be both. The pledges on capping rent in the private sector is a prime example, leaving present rent levels way too high, and doing nothing about the blatant profiteering and tax avoidance of the landlords. Why “tinker” when the country desperately needs “transformation”?
    There are also important questions which Miliband needs to address if he is to convince the electorate. What is his stance on Trident, with the possibility of saving £50bn or more? HS2 is something Labour seems to have gone quiet on, not even addressing the more urgent need for investment north of Birmingham. Then there is the vexed problem of support for Israel, which comes as second nature to America, but its refusal to obey International Law worries many in this country. The leader`s silence cannot be interpreted for ever as evidence that these issues are under control.
    Not only does Labour`s half-hearted acceptance of Miliband`s leadership need to end, a collegiate spirit and unmitigated support for Miliband must be developed immediately, or we wave goodbye to hopes for a Labour victory. With the majority of the media, including, sadly, the politically neutral BBC, enjoying their anti-Miliband “season”, the need for unity is essential, but there have to be signs of strong leadership too!

    Posted by Bernie Evans at 09:12
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  2. Tafia says:

    How about extending competition in the Members bars? Instead they intend to rip us off even more – worthless pile of scum.

    Let’s here Labour MPs demand that the subsidies are removed and it gets put out to tender and run by the free market with competition.

    Real pigs will fly before the Westminster pigs stop stuffing themselves.

  3. Madasafish says:


    Any party which eschews competition for people who want to become MPs – and which then selects them centrally – is just playing with words . Utter hypocrisy. Both Tories and Labour talk grand words- but don’t believe it should apply to themselves.

    If they believed in democracy they would both have open primaries.

    Actions speak louder than words.

    No wonder politicians are regraded as lower than estate agents and used car salemen. They deserve it. If political parties had to operate under the Trades Description Act, they would all be in jail.

  4. Ex Labour says:

    Mmmmmm…you say “The UK has made real progress in ensuring that most adults have some form of bank account, with just 3 per cent not having one”…….”However, whilst 3 per cent may not sound like a lot, this still amounts to some three million Britons”.

    If 3% is 3 Million that would make Britons population 100 Million. Whilst Labour’s immigration policy has created chaos I dont think we are quite at 100 Million yet.

    Back to school for you there Callum or is it the Miliband School of Statistics ?

    It may possibly have slipped by you, but there has been the Vickers Commission and a Bill to regulate banks and all aspects of their business to prevent any repeat of the credit crunch.

    Also if you go for the German model of small banks, the issue is that smaller banks and financial instituations rely on loans from larger banks at interbank rate to function. If this liquidity is withdrawn or unavailable then you get a credit crunch and Labour put us back to square one.

    There is a reason that Osborne is way ahead of Balls in the polls regarding financial management.

  5. John reid says:

    I don’t know what meacher means when he cites Mandleson, as being un loyal, Mandleson said Ed was his leader and he wanted him to win, but wouldn’t have done the same things, of course I could mention McClusky wanting A EU referndum, calling for the Blairites to be ousted, via Andy Newman and Jon Lansman,making up some rubbish about progress(of which I’ve never been a member) being a party within a party, or Livingstone, twice not backing the labour candidate for a tower hamlets

  6. Callum Anderson says:

    Hi Ex Labour

    You are quite right – that was a typo – my fault, not the editor’s. The point I was supposed to make was that 3% of people do not have a basic bank account at all, and then, in addition, there are 3 million who haven’t a bank account and are underbanked (that is, those with severely poor access/services to basic financial services). Please accept my sincerest apologies for this error.

    And it may have escaped you, but it is also ‘Britain’s population’. ‘Britons’ is a demonyn for people from Great Britain. Similarly, an apostrophe on ‘don’t’. Oh and the ‘m’ in million doesn’t need to capitalised.

    Guess, I’ll see you in class 🙂

    And, no, the Vickers Commission did not slip by me. However it made little reference to competition (what I try to get at in the article) beyond ‘let’s make the financial system more stable’. Hardly groundbreaking stuff.

    Oh and your point about Osborne and Balls is ever so slightly spurious in this context. But you’re ‘Ex Labour’ for a reason. I get it.

  7. Ex Labour says:

    @ Callum Anderson

    Oh dear we are getting a little petty aren’t we? Unfortunately I don’t have time to spend hours working on puff pieces and checking them. If did my spelling would be good but I’d also make damn sure my facts and figures are correct. I assume that it was a mistake, there again if you follow Miliband it may not be?

    Why do you assume that everyone wants a bank account? I know several people who do not and will not have a bank account. If people want one it’s very easy to open and all you need is a few quid. You are of course implying that Labour’s nanny state should step in and make the providers responsible for these people. Of course you will then expect the institutions to provide cheap credit to those you deem worthy. Who pays? Well of course as it’s labour, every taxpayer will be required to contribute and our already excessive individual tax burden rises to pay for yet another of Labour’s pet causes.

    One of the reasons I stopped voting Labour is that you have no concept of personal responsibility and you think that everyone else should be responsible for those who cannot be bothered or don’t want to participate.

    Just out of interest what charity do you work for ?

  8. Tafia says:

    This 3% is it just adults or all people. In addition does it include or exclude peple with mental disabilities, bed-ridden and/or senile pensioners etc etc. The Post Office has to pro ide basi. bank accounts to anyone who wants one – even the homeless so long as they have proof of identity.

  9. Fred says:

    Ex Labour, Callum is just another opinionated child with narcissistic tendencies. The puff pieces are for the benefit of his ego.

  10. Madasafish says:

    Callum stated “ And access to other types of financial tools remains patchy. 59 per cent of UK households have savings of less than £5,000 and 56 per cent of the poorest households do not have home content insurance.

    So what?

    It’s personal choice or lack of money that drives individual decisions..

    I assume you mean people MUST have insurance…Well I for one will not pay my taxes to subsidise others for their poor financial decision making.

    But then I assume you think personal choice is a bad thing.

  11. Fred says:

    The thing I found most amusing was the assertion that Labour could make a positive intervention in the Finance sector. You can understand when a public sector wonk blurts this stuff out but the reality is that Business is pertified of Labour. It knows full well that Labour have regressed to the pre Blairite period and would ruin the economy.

    Hodges calls it right. The pup who wrote this was probably wasn’t born when Kinnock lost his first election.

  12. theProle says:

    IIRC I don’t have home contents insurance.

    The contents of my home being largely valueless, and the risks to them low, why would I pay an insurance company an extra £70 a year to insure them?

    Some years a ago I lived on a narrowboat which was burnt out, and I lost pretty much everything I possessed, without insurance, so I know what I’m risking here better than most people. (And I still wouldn’t take out comprehensive insurance if I lived on a boat – it’s simply not worth it for some older and less valuable boats!).

    I wouldn’t dream of not having insurance for my house itself – that’s a risk I can’t afford to take.

    Why does my carefully thought through decisions mean the government has to worry about this sort of stuff for me?

    See also a friend’s wife – who hasn’t got a bank account. Happily married for years, her husband is the faimilies sole earner – the bank account is in his name, he withdraws some cash a couple of times a week and give is to her, and all is well with the world. It’s not how I would want to organize my finances (I’ve that many different accounts you might think I was a dodgy African dictator), but they seem happy enough, so why should the government worry?

  13. Blair says:

    Callum stated “ And access to other types of financial tools remains patchy. 59 per cent of UK households have savings of less than £5,000 and 56 per cent of the poorest households do not have home content insurance.

    To be frank I’m surprised it’s only 59%/56%. I’d speculate if you knocked pensioners out of that and also didn’t include peoples current accounts the figures would be far higher. When I had a business for 8 years and employed nearly a dozen people I never had any savings at all and I was by ni means unique. All I had was a business bank account and a personal one – no savings account. In fact I don’t have anything other than a current account now.

    Five grand to most adults in this country is a colossal amount of money.

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