Royal Bank of Scotland — House of Commons, 2015-11-05
Topic: Domestic Commerce
Grahame Mark Morris (Labour, Centre-left): I should like to thank my hon. Friend the Member for Edmonton (Kate Osamor) for bringing this important debate to the House. I also want to thank the Backbench Business Committee for allowing the time for it to take place. I rise to speak in support of the motion. The risk of speaking quite late in a debate is that everything might already have been said, but I shall try to pick out a few points on where we are now and on the benefits of finding a real alternative to having another privately owned bank As we have heard today, and as we know from our own experience, the UK banking and financial system brought our broader economy to the brink of collapse in 2008. Indeed, we were just days away from the banks closing their doors and the ATMs—the cash machines—running out of money. That was caused not by a profligate Labour Government but by an under-regulated financial and banking sector that had no concept of social responsibility and that took reckless gambles with our economy and lost Today’s contributions from Government Members have generally been positive. Indeed, I have been quite surprised at how open Conservative Members have been to the ideas put forward in the motion, which is a reasonable one. We have also been hearing, however, that things have moved on and that RBS in particular has been subjected to major changes and is now a different entity. My view is that, for as long as we have a bonus culture in which bankers are financially incentivised by the prospect of receiving huge bonuses for a single deal—more than an ordinary working man or woman could accumulate in the whole of their working life—bankers will continue to take chances, to gamble, to fall foul of LIBOR schemes and to mis-sell products. We need to change that culture fundamentally, and we now have an opportunity to do that by creating an alternative system In the bail-out at the height of the crisis, the UK Government’s total support for the financial system exceeded £1.1 trillion and, as we have heard, the taxpayer-funded rescue package for RBS exceeded £45.5 billion. It is estimated that the privatisation proposals being put forward by the Chancellor of the Exchequer will cost the public purse £13.5 billion, which is a very considerable sum. I believe that the whole of Parliament, not just those on the Opposition Benches, should be affronted by the way in which this is being done. The announcement was made not to the House of Commons but in a speech at the Mansion House in the City of London. That is an affront to democracy. Our role is to hold the Executive to account, and we should have had a full debate in Government time on this issue. Now, however, we should look at some of the alternatives One of the downsides of RBS’s recent activities has been the number of branch closures, with 165 closing in the past year, a number of which were in my constituency. We have heard about the LIBOR scandal, and my hon. Friend the Member for Norwich South (Clive Lewis) has referred to other more recent scandals. The bank has also been implicated in undermining viable small businesses, as the hon. Member for Hazel Grove (William Wragg) pointed out. That has had scandalous consequences for the real economy I believe that, following the general election in 2010, the Government used the financial crisis as a way of justifying policies of austerity. Instead of focusing on the banking sector, learning the lessons and changing the political narrative, the Prime Minister and the Chancellor of the Exchequer successfully shifted that focus on to an apparent need to impose austerity. An economic crisis in the banking and financial sector was used to introduce a series of policies in which everyone was blamed, from public sector workers to the low-paid, the vulnerable, the unemployed, the sick and the disabled. Investing in our future, rebuilding our schools and hospitals, and increasing the numbers of doctors, police officers, teachers and nurses have now been caricatured as profligate spending. I am proud of Labour’s record, and I am never going to apologise for investing in the foundations and building blocks of a just, fair and decent society. We need a banking system that works for the real economy, and we have that opportunity if we choose an alternative way of looking at how we take forward RBS I implore the Chancellor to reshape our banking system. I ask him to consider the alternatives and not simply return RBS as the same London-centric, privately owned, commercial bank that mimics the existing banking culture and services in the UK. We do not necessarily want a state-owned bank run from Whitehall, and alternatives have put forward by various hon. Members, including my hon. Friend the Member for Dagenham and Rainham (Jon Cruddas). A real alternative would be to use our stake in RBS to create a local stakeholder banking network. That would be tasked with supporting small and medium-sized enterprises and rebalancing our economy, and it should have a public service mandate I had a walk through the City of London at the end of the recess, where I saw some of the fine buildings, with their images of industry—of ironworks, engineering and railway investments. We have lost that public service ethos. We instead have an idea of driving the investment banking arm, speculating in mortgages overseas, and of this drive to double-digit profits, which has undermined jobs in the real economy. There should be a specific duty to a particular locality, not a duty to maximise profits, but one to optimise returns to a range of stakeholders, including customers and the local economy. Such an approach would complement the Government’s stated devolution agenda, providing the regions with the financial power they need to support the SMEs that will deliver the economic growth and the new jobs that we need to rebalance the economy We should learn the lessons of the financial crisis. The large commercial banks withdrew credit from our economy and lending to the non-financial corporates—to manufacturing, construction and retail, for example—fell by 25% in the five years from August 2008. Germany experienced a similar collapse in lending from commercial banks, but its well-established local banking network, the Sparkassen, which colleagues have mentioned, and the local co-operative banks increased lending to domestic enterprises and to the self-employed over the same period by between 16% and 25% Time is short, so I wish to make only a few points in conclusion. The concentration of large, too-big-to-fail banks commercial banks leaves the UK uniquely exposed to another financial collapse. Returning RBS to that system would increase, not decrease, the risk to our economy. At the very least, the Government should consider the merits of the stakeholder model as a driver of growth, as well in creating a more stable banking system which can protect the real economy from future shocks. The Chancellor should not pursue a rushed policy of privatisation, which risks leaving the taxpayer worse off, not only through incurring a loss following the sale of the remaining shares, but, worse still, through continuing with an unreformed banking system that will condemn us, once again, to repeat the mistakes of the past. I support the motion.