George Osborne is continuing to duck the radical banking reform we need

Ed Balls MP, Labour’s shadow chancellor, responding to the Parliamentary Commission on Banking Standards’ Second Report and ahead of tomorrow’s Second Reading of the Financial Services Bill, said:

“This latest report from the Parliamentary Commission on Banking Standards makes for disappointing reading. It confirms George Osborne is continuing to duck the radical banking reform we need and which the cross-party commission has demanded.

“Labour has already set out plans to amend the Bill on a range of areas – including structural reform, professional standards, remuneration and competition – and we welcome the amendments that the commission plans to make too.

“In particular we need a strong reserve power with the option for full separation of banks across the board, and not just for one or two banks, as Labour and the Parliamentary Commission on Banking Standards have repeatedly called for.

“It’s astonishing that George Osborne will not be turning up in the House of Commons on Monday to debate this important legislation. Our downgraded Chancellor must stop running scared of scrutiny on these vital changes.”

We need long-term reform and action now so that the banks support economic recovery. So Labour is also calling for urgent reform of the Bank of England’s Funding for Lending scheme so that banks can only access the lowest rates of funding if they increase lending to businesses as well as overall lending.

Labour will table an amendment to the Financial Services Bill, being debated in the House of Commons at Second Reading on Monday, to demand an urgent review of the flagship scheme. Labour will also call for it to be extended beyond the end of 2013, as currently envisaged by the government, to the end of 2014 to give more certainty to banks that the lower cost credit will continue to be available.

Ed Balls added:

“When net lending to businesses has fallen for three years on George Osborne’s watch it’s clear his policies aren’t working.

“We can’t go on like this. Boosting lending to small and medium sized firms is absolutely vital if we are to get our flatlining economy moving. The Funding for Lending scheme should be reformed so that banks can only access the lowest rates of funding if they increase lending to businesses as well as overall lending.

“As well as action to increase lending to businesses, the Budget must also kick-start the economy by boosting infrastructure investment and cutting taxes for people on middle and low incomes. The Chancellor must wake up, recognise his policies are failing and finally act to help struggling businesses.”

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Posted March 11th, 2013 by Ed's team