Change your ways or we’ll force you to, Ed Miliband tells banks
Labour leader gets tough as conference kicks off, but rumours of infighting threaten to spoil the party
THE BANKS have been delivered an ultimatum by Labour leader Ed Miliband: change your ways or be broken up by force.
In an interview with the Observer published as the Labour conference gets under way in Manchester, Miliband highlighted what he sees as the watering down by the Coalition of recommendations made by the Vickers report into banking reform, which called for banks to separate their retail arms from their riskier investment activities.
"Either they can do it themselves – which frankly is not what has happened over the past year – or the next Labour government will, by law, break up retail and investment banks,” said Miliband.
"The banks and the government can change direction and say they are going to implement the spirit and principle of Vickers to the full. That means the hard ringfence between retail and investment banking. We need real separation, real culture change. Or we will legislate."
Miliband refers in his interview to “Glass-Steagall”, a 1933 Act introduced in the US to split up the retail and investment activities of banks there following the 1929 Wall Street crash.
"It is a drastic step doing Glass Steagall,” says Miliband. “I want to get the culture change whatever way I can get it. If it can be done in another way, I'll do it."
Miliband predicts he will be attacked by critics who say banks will be in danger of collapsing because their profits will fall and those who believe financial institutions will abandon the City of London and go abroad.
He rejects both objections: “We can't give in to those arguments any more. For too long governments have succumbed to those kind of arguments and we haven't done the right thing for the country.”
Miliband hopes recent banking scandals will ensure he receives the public support he needs for his hard man act against the banks. The Labour party told the BBC scandals over Libor and the mis-selling of payment protection insurance had reinforced "how important it is to achieve real culture change".
But even as Miliband attempts to seize the initiative, and as the Observer puts it, lay to rest the public perception that he is not tough enough to be prime minister, there are signs that media coverage of the Labour conference could be dominated more by reports of splits in the party.
The Observer fires up the rumour-mill by noting it is “interesting” that Miliband, not the shadow chancellor Ed Balls, is launching this initiative, before going on to talk about their allegedly “difficult” relationship.
Over at the Mail on Sunday, meanwhile, there are new claims of shadow cabinet infighting and bad blood between Miliband and his brother David, whom he beat to the Labour leadership in 2010.
In extracts taken from an updated version of Ed: The Milibands And The Making Of A Labour Leader, Mehdi Hasan and James Macintyre claim that David Miliband was overheard last year saying: “Ed will crash and burn.”
A mutual friend is quoted saying the story of the two brothers’ relationship is that it is “a bigger deal than a soap opera. It’s bigger than anything else and so becomes this big obstacle. Because, actually, it’s about two brothers”.
The book claims that the “Ed Balls machine” is running the show and that if Ed Miliband fails, it will replace him with Balls’s wife, the shadow home secretary Yvette Cooper. A Labour source says: “Ed Balls has got a sentinel at every single door in Ed’s office, in every corridor. He’s man-marking Ed Miliband.”