The case for Labour's Banking Reforms

Ordinary British people are facing the worst cost of living crisis in a generation.  We here in relatively prosperous South Leicestershire are no exception.

Prices are soaring, wages are falling, working people are £1,600 per year worse off and small businesses are struggling to access the finance they need to grow. Yet David Cameron continues to demonstrate how out of touch he is with the struggles millions are facing and is determined to operate our economy as business as usual.

Members of Lutterworth and Broughton Astley Labour Party are delighted that Labour has made firm plans to help people struggling with the rising cost of living, such as Ed Miliband's pledge to freeze energy bills until 2017. But as important as this pledge is, it only helps to deal with the consequences of our current economic state, and not the symptoms.

The Tory-led Government has failed to make the long-term changes needed to build a new economy that works for everyone and not just a few at the top.

The Tories won’t build a new economy that can tackle the cost of living crisis. They are determined to cling on to the old economy in a global race to the bottom. They think low wages, low skills and insecure work is the way to take Britain forward in the hope that some of the wealth will trickle down from the top. 

If we’re serious about dealing with the cost of living crisis and winning the race to the top with countries like China and India, then we need to build a new economy that works for everyone, and that means dealing with one of Britain’s broken markets: our banking system that works for banks but not for businesses and families.

Britain’s banking system is dominated by just four banks that control 85 per cent of small business lending. This lack of competition is a root cause of poor service, a breakdown of trust and a massive drop of £56bn in lending to business since May 2010.

Part of the reason we rely too much on low paid, insecure work is that the small firms that could create the good, high paying jobs of the future can’t get the finance they need to grow both themselves and our economy.

Of course we need to keep supporting Magna Park and the international companies based there. But we mustn't forget that our local economy depends on small and medium-sized businesses. Even our villages have small business parks which are key to growing our future economy. For these enterprises to thrive, government must promote a wider range of banks that have to compete harder with each other for customers.



That’s why the next Labour Government will bring in a legal threshold to ensure no bank can get too big and that the market remains competitive for the long-term. We will improve the amount of lending to small businesses, improve the service to all customers and create new banks that will work for the communities they serve.

Under a Labour Government, small businesses will have a better chance of getting the support they need to grow, employ more people at decent wages and help Britain earn its way to better living standards for everyone.