Bankers Attempt Last-Gasp Osborne Lobby Over Reform

George Osborne is meeting with Barclays chief executive Bob Diamond today as bankers launch a last gasp bid to delay banking reforms.












Barclays chief executive Bob Diamond believes banking reform could halt economic recovery.

It is expected that the independent banking commission chaired by Sir John Vickers, which is due to report within two weeks, will recommend that banks split their retail and investment arms to protect the public.

However Mr Diamond is arguing this will prevent banks from lending to small businesses and personal customers as they will have to hold more capital.

There is speculation that if the Vickers report is too strict then Barclays could respond by moving its investment banking arm, Barclays Capital, overseas.

Mr Diamond's attempts to dissuade Mr Osborne from implementing the rules in the short term follow warnings from several pro-business campaigners that major banking changes could throw the economic recovery off course.

Angela Knight, chief executive of the British Banking Association, said earlier this week that "now is not the time" for reforms.

Other heads of British banks are expected to meet with Mr Osborne over the coming days prior to the publication of the Vickers report on September 12th.

Banking reform could yet prove a contentious issue for the coalition, with business secretary Vince Cable accusing bankers of being "disingenuous in the extreme" earlier in the week.

He added: "The uncertainty and instability in the markets makes it all the more necessary that we press ahead and make our banks safe and reform them."

However Mr Osborne is thought to be more sympathetic to the banks position and appears to have an ally in the prime minister, David Cameron, who warned against reforms which put the economy at risk.

Ms Knight said Britain faced a "very difficult autumn" which would only be made worse by news of long-term reform of the banking sector.

"We have a high degree of uncertainty, market turbulence and lack of confidence that governments in other countries have got a sufficient grip on their economies," she commented.

"This is therefore the time to concentrate on economic recovery and paying back... the government and taxpayers.

"By all means think about new regulation but now is not the time to add that as an overlay with respect to costs, uncertainty or whether it is going to do anything beneficial anyway."

John Cridland, head of the Confederation of British Industry, cautioned that any major shake-up of banks at a time of economic uncertainty was "barking mad".

He told the Financial Times newspaper: "Taking action at this moment – this moment of growth peril, which weakens the ability of banks in Britain to provide the finance that businesses need to grow – is just to me barking mad.

"We don't want to force some of our remaining world class British companies to shift away from a focus on the UK because the rules have been set unilaterally in the UK.

"There's an own goal here about to be scored if we get this wrong."

British PM Rejects Idea MPs Partly To Blame For Riots

David Cameron and Ed Miliband clashed yesterday over whether the behaviour of politicians and bankers may have played a part in provoking last month's riots.








David Cameron has blamed the riots on Britain's 'broken society'.

Downing Street played down the findings of an academic research project suggesting lack of trust in politicians was a bigger factor in people's willingness to riot than other explanations such as lax moral values or poverty and the Government's spending cuts.

But Miliband, the leader of the Opposition, and Nick Clegg, the Deputy Prime Minister and leader of the Liberal Democrats, made clear that they were open-minded about whether alienation from the political class may have played a role.

Prime Minister Cameron, who regards the riots as a symbol of Britain's "broken society", yesterday began chairing a Cabinet review of the Government's social policies to see what changes are needed as a result of the riots. It will include state benefits, schools, parenting, family policy and whether health and safety and human rights laws prevent "common sense solutions" to social problems.

Commenting on the research by Essex University and Royal Holloway, University of London, Cameron's official spokeswoman said: "One can speculate but we are not necessarily going to know exactly what the causes were. The Prime Minister has been very clear. We have to have a very strong response in the wake of the public disorder."

The Liberal Democrats said the perception that politicians, bankers and others at the top were "getting away with it" may have been a factor in the refusal of rioters to abide by the "rules of the game" too.

Clegg is believed to be sympathetic to the academics' warning that depriving rioters of their state benefits could backfire - alienating them further and making them more likely to break the law again. Tory ministers have backed benefit cuts, but Clegg is warning Cabinet colleagues against a "kneejerk" response to the disturbances.

Labour sources said the academics' findings should be considered by the panel being set up by the Government to look into the reasons behind the riots.

Yesterday the Labour leader rejected Cameron's claim that the riots were caused by a breakdown in values. "There are issues of values but you've also got to address the issue of the values at the top of society, because the top of society sets an example for the rest and it hasn't been setting a good example in the last few years," Miliband said.

Miliband also promised to force a Commons vote on the cuts in police numbers.

MEDIA RESIST FOOTAGE CALL

Newspapers and broadcasters face growing pressure from the Metropolitan Police to hand over footage and pictures relating to the London riots.

Scotland Yard has threatened organisations with a court order forcing them to pass on material that may show "crime in action" if they refuse to comply.

Media groups have rejected the demands, maintaining that the press is an impartial recorder of events rather than an evidence-gathering mechanism for the police.

The police would have to convince a High Court judge that the police request outweighs the public interest of having a free press.

Other forces, including Greater Manchester and West Yorkshire, began approaching local and national media a fortnight ago.