Monday:
Hard Labour's Mr Milipede has called for the "break up" of the banks. More accurately, he's called for no more than the implementation of last year's Vickers and Tarts report.
Not that the Coalition's WATERED DOWN Vicker's proposals are GOOD, but Hard Labour's proposal is TIMID, and leaves a HUGE OPPORTUNITY for Liberal Democrats to lead REAL RADICAL REFORM.
WE SHOULD break up the banks but NOT JUST into "high street" and "casino". We should take these ENORMOUS institutions, particularly the two that we OWN and turn them into LOTS of SMALL local and regional banks.
I wanted to say this in the "Growth and Jobs" debate at the Brighton Conference just past. I put in a card but sadly I didn't get called. Sadly, because the debate was largely side-tracked into a false debate between the leadership and Liberal Left's amendment. I don't think that that debate was helped any by having so many of the speakers against the amendment be MP's; when it came to a vote it seemed very few people – passionate though they are – actually favour breaking the Coalition's fiscal mandate agreement. It would have been HEALTHIER for the Party to see some "ordinary" members taking to the stage to speak against the amendment. I know I would have done, given the chance.
However what I really wanted to contribute was support for the policy of better access to local banking and credit for small business. Largely what I'd have said was this:
The banks are very big, international institutions. But jobs and growth in the UK have always, historically, come from small and medium sized local businesses. This is a FUNDAMENTAL MISMATCH in SCALE.
Small and medium sized businesses are the REAL "wealth creators" and often they're not ACTUALLY WEALTHY (a distinction that the Conservatories prefer to blur – but I'll talk about the need to tax WEALTH rather than WEALTH CREATION in a different diary) and not being wealthy means that these businesses, and the people who work to make them work need to BORROW.
And we know that small and medium businesses are the ones finding it HARDEST to get investment from the big banks. That's why Vince is having to set up HIS OWN bank just to try and uncrunch the credit to their businesses.
We can't expect Vince to do all the heavy lifting by himself though. That's why we need MORE banks. That's also why we need them to be SMALLER, LOCAL banks where they have the knowledge to help and support local businesses.
Hard Labour's solution to FAILING Banks, Mr Alistair Dalek's solution, was to bung them together into EVEN BIGGER banks. Even bigger FAILURES.
We all know that "banks too big to fail" were really just "TOO BIG".
The answer to the risk of bank lending is NOT to make them store up money like dragon's treasure. That's what we're doing, but it's what is stoppering up the flow of money to business.
Instead we should spread the risk about so that it becomes SMALLER and more MANAGEABLE. Small banks might be at greater risk if local businesses do badly, but small banks are SMALL ENOUGH TO SAVE.
I'm not saying get rid of ALL the International Banks. On the contrary, we need banks at all different scales. But policies of acquisitions and mergers, and laisez faire attitude to COMPETITION have seen big banks gobble up small ones, leaving us with a virtual CARTEL. (And if we're going to convince the Conservatories about this, remind them that more banks means more COMPETITION which is supposed to be GOOD for the consumer. They're supposed to like that sort of thing.)
Making banks SMALL is GOOD LIBERALISM: it protects people from BULLYING by putting them on a more even footing with their bank AND it encourages LOCALISM by giving the small bank bankers an incentive to invest in their community.
(I'm going to try writing a few "big policy idea" pieces in the near future for the fairly obvious reason that the FEDERAL POLICY COMMITTEE elections have come around again.
If you want to see the Party discussing big, radical policies again, please do encourage any voting reps to vote for me – that's Richard Flowers, rather than Millennium Elephant.
And if there are any big ideas you think I should be covering, or even any radical small ideas, please comment or e-mail me!)
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