Credit where credit is due:
the Labour leader Ed Miliband has been setting the agenda on the key political issues in the past few months. First, he suggested an energy prize freeze. Then he called on the Government to block large banking bonuses. Now he is suggesting the UK's biggest banks should be forced to sell a large number of their branches to increase competition.
In principle, this idea sounds right although the lack of competition is partly due to the fact Lloyds TSB was allowed to buy HBOS when it came close to collapse in the economic crisis of 2008, when Labour was in government.
Six years on from the start of that crisis, Mr Miliband says too much power in banking is in too few hands and the big players should be forced to sell branches to so-called challenger banks. He also supports the idea of a cap on market share.
In suggesting these reforms, he is tapping into justified frustration at a lack of progress on reform and a suspicion that, with the economy recovering, bankers believe they can go back to their old ways. Mr Miliband rejects this, quite rightly, and says he would take action on his ideas within months if Labour wins the General Election next year.
However, much as the call to action is welcome, there are practical problems with Mr Miliband's ideas, not least the idea of selling off branches. Apart from anything else, it has been tried before and it became clear that there was a distinct lack of natural buyers. In 2009, hundreds of branches were put up for sale by RBS and Lloyds. Eventually, Santander pulled out of a deal to buy RBS branches and a deal in which the Co-op would buy 630 Lloyds branches also fell apart. It promptly became clear that the Co-op was in no position to buy anything.
Nothing much has changed since then (there are still no obvious candidates for challenger bank status) although there are plans for RBS to revive Williams and Glyn's Bank to buy branches and Lloyds has plans to float some branches as TSB.
These plans may yet succeed, but whoever takes on the branches will face significant challenges. Even if they could bring the capital together to run a bank, could they really take on the big boys with a rag-bag network of sold-off branches?
There are similar practical issues with the idea of a cap on market share, the key question being how the limit on a bank's share would be measured. Mr Miliband says he will not pluck a figure out of the air, but he will have to come up with a figure before the policy can be accurately assessed.
On the subject of the banks' relationship with businesses, the Labour leader is on much stronger ground, with the Financial Conduct Authority announcing it will conduct a review into claims RBS forced small companies to go out of business so it could take control of their assets.
Mr Miliband believes his ideas will transform the market for the benefit of such businesses but he will have to provide much more detail before the policies can be properly judged. In the meantime, the much-needed, profound transformation of the banking sector for the benefit of businesses, customers, and the economy remains as far off as it was in 2008.
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