Miliband to warn banks about risk of 'social isolation'
Published: 3rd Feb 2012 03:08:21
Ed Miliband is to call for a culture of "one nation banking" in which financial institutions are not "isolated" from the rest of the economy and society.
The Labour leader will say banking is at a "crossroads" after recent rows over bonus awards and the decision to rescind Fred Goodwin's knighthood.
He will insist calls for action are driven not by "the politics of envy" but the need for "values of fairness".
Labour will press for a vote on bonuses in Parliament next week, he will add.
His comments come at the end of a week in which RBS boss Stephen Hester waived a £963,000 share-only bonus amid widespread political anger over the award and his predecessor Fred Goodwin was stripped of his knighthood.
In a speech in London, Mr Miliband will say these events were "symbols of public discontent with a system that is not working any more".
But he will argue the debate must not be confined to individual cases but focus on the wider issue of the role of banking in economy and society.
"This is not about one man, one bonus or one knighthood," he will say. "Nor is this about the politics of envy.
We are once again at risk of becoming two nations in this country, segregated economically, geographically and socially”
"It is about a culture of responsibility. Labour has set out the case for new rules to tackle irresponsibility from the benefits office to the boardroom. Values of fairness matter more than ever when times are tough."
Banks have played a valuable role in the past in promoting enterprise, helping new industries develop and old ones restructure, Mr Miliband will say.
However, he will say that bank lending fell £10.8bn last year and that if the industry "continues on its current path" it risks becoming "further isolated" from society and provoking greater "public anger".
"This is a call on banking to recognise it has reached a crossroads. This is a call on banking to recognise that it should take the path of change. To recognise that we succeed or fail together."
Mr Miliband will urge banking to be at the service of all sections of society - both rich and poor.
"One nation banking recognises that these institutions cannot be isolated from the rest of society - that we are once again at risk of becoming two nations in this country, segregated economically, geographically and socially.
"This is not the kind of society in which I want to raise my children. And it is not the kind of society in which the vast majority of people in this country, including bankers, want to raise theirs."
The term "one nation Conservatism" has traditionally been used by Tories who regard social justice and equality as much of a priority as economic freedom and opportunity.
Mr Miliband will say Labour intend to press ahead with a Commons debate and vote on City bonuses tabled in the wake of the row over Mr Hester's bonus.
This, Mr Miliband will argue, will give MPs a chance to have their say on bonuses that have become "too big, too often" and are too often "based on one-way bets rather than genuine reward for risk".
The Labour leader clashed with David Cameron over the issue of executive pay in the Commons on Wednesday, with the prime minister accusing Labour of failing to regulate the banks while it was in government and agreeing contracts for RBS bosses entitling them to million-pound bonuses.
No 10 has rejected Labour calls for every remuneration committee to have an employee representative sitting on it, saying such a move would break with established corporate governance procedures.
However, it says its package of reforms will ensure banks have to publish more details of what their top earners are being paid as well as giving shareholders binding votes on pay.
The Institute of Directors and other City groups have warned that the recent outcry over bonus awards and Fred Goodwin being stripped of his honour risks creating "anti-business hysteria".
Introduced bank levy - now 0.088% on the value of all of the debts of UK banks - aims to raise £2.6bn a year
Wants repeat of tax on bank bonuses - says it could raise extra £2bn. Says bank levy amounts to a tax cut
Wants "no rewards for failure". Not in favour of a salary cap, but wants to use shareholder influence to rein in pay
SupportsHigh Pay Commissionrecommendations, including employees on salary committees
Consulting on new rules to require UK's 15 largest banks to reveal remuneration for eight highest-paid non-board executives (board executives pay is already published)
Simplify pay packages and require investors and pension fund managers to disclose how they vote on pay. Publish ratios between highest paid and company average
Wants shareholders to have veto on excessive pay and dismissal packages
Wants shareholders to replace board members on remuneration committees
Pressing ahead with plans to separate retail from investment banking
Supports code of conduct for bankers - could see them struck off
Harvard CitationBBC News, 2012. Miliband to warn banks about risk of 'social isolation'. [Online] (Updated 03 Feb 2012)
Available at: http://www.manchesterwired.co.uk/news.php/222974-Miliband-to-warn-banks-about-risk-of-social-isolation [Accessed 24th May 2013]
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