Belfast Telegraph

Coalition denies split over banking reform

By David Hughs and Andy Philip

Liberal Democrat Cabinet minister Vince Cable has played down reports of a rift with Conservative coalition colleagues over banking reform.

The Business Secretary said he did not "think there is a difference" within the Government over the likely proposed ring-fencing of banks' retail and investment arms.

The Independent Commission on Banking is widely expected to propose the reform later this month, but reports have suggested that Chancellor George Osborne and Prime Minister David Cameron are sympathetic to lenders' claims that they will need several years to make the change.

Senior figures in the business and banking community have warned against imposing the reform, particularly given the fragile state of European economies.

CBI director general John Cridland said pushing ahead with the measure at the current time would be "barking mad". British Bankers' Association chief executive Angela Knight warned imposing the measures on lenders risked denting confidence and cutting the supply of credit to the economy.

Mr Cable dismissed their concerns about the state of the economy as "disingenuous in the extreme" and said continuing anxieties about the health of banks showed the need for reform.

The Prime Minister said no decisions would be made until the publication of Sir John Vickers' commission's report on September 12.

He added: "I think the key thing we want from banks is lending into the economy so we can support growth and jobs, and we need to make sure we are not taking risks that put jobs at risk."

Mr Cable, who was visiting Edinburgh University yesterday, said he had worked closely with the Chancellor on the issue.

He said: "I don't think there is a difference within the UK Government.

"I've worked very closely with the Chancellor to set up the Independent Banking Commission and set up its terms of reference.

"We both agreed publicly that there needs to be reform of the banking system."

But Labour seized on newspaper suggestions the Business Secretary and Chancellor were at loggerheads over the reform.

Shadow Treasury minister Chris Leslie said: "The Government needs to get a grip. The choked-off recovery we've seen since George Osborne's spending review and Vat rise should not be an excuse for ducking the necessary reforms.

"Nor should rows between senior Cabinet ministers, and coalition politics, nor lobbying by the banking industry, stand in the way of delivering banking reforms that are in the national interest.

"That's why in its final report next month the Vickers Commission should advise bickering ministers on the timing for implementing these reforms.

"In the short term we need the banks to support the jobs and growth that are essential to get the deficit down.

"That means tougher action to get the banks lending to small businesses and a fair tax on bank bonuses to fund 100,000 jobs for young people.

"And in the medium term we need banking reforms that pass Labour's three tests of protecting customers and taxpayers, securing international agreement to protect jobs in Britain, and delivering a banking system that supports the long-term interests of the wider economy."

Popular