LABOUR leader Ed Miliband will today confirm his plan to break up some high-street banks in an attempt to increase competition.
In a speech at the University of London this morning, Miliband will claim that Britain can only earn its way out of the cost-of-living crisis by reforming the banks and building a new economy to compete with India and China.
“The cost-of-living crisis is the single greatest challenge our country faces because not since the century before last have we seen such a sustained fall in living standards,” he will say today. “We are not asking whether existing banks might have to divest themselves of a significant number of branches. We are asking how we make that happen. After decades of banking becoming more and more concentrated, Labour will turn the tide.”
In a move that will heighten uncertainty in the City and cast a fresh shadow over UK banks’ future, the Labour leader will set out his plan to reduce their market share, based on an American system that limits national bank groups. Although there is no mention of a target market share, it has been widely speculated that Miliband will seek to impose a 25 per cent cap. The changes will focus on banks’ share of small business lending and personal accounts.
Miliband will also announce plans to instruct the Competition and Markets Authority to report on banks within the first six months of taking office if he wins the election in 2015. The body will be asked to rule on how many branches big banks must sell off and suggest a timetable for divestment.
Financial secretary to the Treasury Sajid Javid accused the Labour leader of “complaining that his own mess isn’t being cleaned up fast enough.”