Ed Miliband set the stage for a full-on confrontation with the banking industry earlier today when he insisted that there must be a “full, open and independent inquiry” into financial services. Speaking at the Fabian Summer Conference, Miliband argued that the revelation that traders at Barclay’s had knowingly manipulated key interest rates in order to boost profits proved that decisive action was needed to end the corrosive culture of greed at the heart of the City.
Miliband’s speech was a manifesto for action. He demanded that a Leveson-style inquiry into the financial services begin immediately, with full powers to unearth where criminal wrongdoing had occurred. Suggesting that the criminal justice system did too little to prosecute “white collar crime”, he argued that the law needed to change to guarantee that those found guilty of illegal activity within the industry are put behind bars, and banned from working in the sector ever again. Finally, he made the case for a new banking “code of conduct” to ensure that workers in the City conformed to a higher moral standard than the profit motive.
The Conference audience welcomed these proposals with warm applause, even though much of what Miliband said had been mentioned earlier in the week. What made this speech stand out, however, was the strength with which the Labour leader denounced those who had dragged the banking industry through the mud. For once, Ed didn’t pull his punches. He suggested that the chief executives at Barclay’s would not outlast this latest scandal, claiming that they were either knowingly complicit in the illegal activities of their traders, or woefully negligent in supervising them. Intriguingly, he also stated that “no one believes the Libor [interbank interest rate] scandal is the end of the story” tapping into the popular view that the murky world of banking has a whole lot more horror stories to divulge.
Ed’s polling has improved in recent months, but he struggles when it comes to voters’ perceptions of his decisiveness. This speech- and you can bet it will be the first of many on the subject- was designed to close that gap. Cameron will struggle to appear credible denouncing the very people who bankroll his party- a report by GMB revealed that nearly 60% of donations to the Tory party come from individuals and companies linked to finance, hedge funds and other City interests. The advantage is firmly with Labour in this instance, and Ed is pushing it as far as it will go.
What is needed closer to the election is a coherent narrative on how to reform the sector for good. Ed indicated what might be included in this, such as the introduction of “challenger banks” to break up the monopolies of Britain’s banking behemoths, and an end to self-regulation of the industry.
What is encouraging is that, with the public mood behind him, Ed is able to take on the industry head on and firmly lay down the law to the City. No more does he need to pussy-foot around the issue of taking the bankers to task. The electorate is behind reform, and strong, serious reform at that. All Ed needs to do is keep up the pressure to see Labour’s poll lead soar.
Louie Woodall is Assistant Editor of the Young Fabians Blog