Ahead of the report by the parliamentary commission on banking standards, due to report back this week on the future of RBS, Unite, which represents workers at RBS and 120,000 workers altogether in financial services, has called on the government to commit to the full nationalisation of RBS in which the state currently has an 81% stake. This stands in contrast to statements by Ed Balls which, although opposed to Osborne’s planned sell-off, does so on the grounds of timing only, arguing that selling too soon would damage public finances.
Balls said the Conservatives were putting “politics before economics” by trying to privatise the bank before it has been fully returned to health. The union, on the other hand, believes “RBS should become the ‘dynamo’ to drive the UK out of the economic doldrums through lending and support to businesses and communities”.
Banks have consistently failed to lend to support small businesses despite government instructions to do so, Unite argues. Initiatives such as ‘Project Merlin‘ and the ‘Funding for Lending Scheme‘ have both failed to provide adequate access to finance (see notes to editors), with recent Bank of England figures showing that net lending by state backed Lloyds and RBS actually fell by £2.6 billion in the two most recent quarters.
Unite is urging the government to put the national interest before short-term, political opportunities and create a nationalised bank committed to fulfilling the needs of society and the real economy. This would include the creation of a properly resourced ‘British investment bank’ to provide finance for infrastructure investment and to small businesses.
All of the G8 countries, except the UK have some sort of state backed lender for small and medium size enterprises (see notes to editors):
- Canada – Business Development Bank of Canada
- France – Caisse des Dépôts et Consignations (CDC)
- Germany – Kreditanstalt für Wiederaufbau (KfW)
- Italy – Cassa Depositi e Pretiti (CDP)
- Japan – Japan Finance Corporation Small and Medium Enterprise Unit
- Russia – Russian Bank for Small and Medium Enterprises Support
- USA – Small Business Administration (SBA)
Unite general secretary Len McCluskey said:
It is wrong for the government to push only for a RBS sell-off when the banking sector is clearly not fit for purpose in its present form.
The bank is not lending to those who need it including businesses and individual customers. The banking sector is still addicted to dishing out enormous rewards to an elite few, and has yet to offer diverse, local forms of banking.
RBS should become the dynamo which helps drive the UK out of the economic doldrums through lending and support to businesses and communities. This would repay British taxpayers by building a British investment bank. Powerhouse nations like Germany use their banks to promote jobs and growth for future generations.
So instead of looking at the bottom line, or pocketing some cash ahead of a general election, we urge the government to have the bravery to think differently. Create a bank that works in the national interest, including a ‘British investment bank’ to provide finance for infrastructure investment and to businesses.
Going back to business as usual would be a lost opportunity on a colossal scale. Instead the government could make history and reshape banking to support the real economy.”
The union points out that a state-owned bank could
- Increase lending to viable businesses
- Lend to local councils to fund a mass council house building programme
- Lend funds for a significant investment in green infrastructure such as rail and green energy
- Support UK staff at the bank with living wages.
- Stop the payment of irresponsible bonuses and disproportionate pay awards to those engaged in ‘casino banking’
- Lend to individuals to offer them an alternative form of credit to the legal loan sharks (pay day lending) who provide emergency cash, but at extortionate rates.
Excellent proposal from Len but if Labour had wanted to go the whole hog surely they would have done so when in office.
My guess is that Labour will want to demonstrate their business-friendly credentials so will proceed with a sell-off when/if they’re returned to power.
Perhaps Labour could use the proceeds to finance Jim Murphy’s proposed military interventions in Africa?
Who on earth would buy RBS, even the “good” bits? Only in February, none other than Nigel Lawson called for the whole of it to be nationalised, so as to force it to lend to business. That’s right. Nigel Lawson.
But he was still only halfway there. Investment banking and retail banking should be split completely. Unless the TSB really is to be reconstituted with its Trustees appointed by the Church of Scotland, the Methodist Church, the United Reformed Church and the Baptist Union, then all retail banks other than the public stakes in HBOS and RBS ought to be turned into mutual building societies, ironclad as such by statute, the same Statute Law that already forbids building societies from engaging in investment banking.
Those public stakes should indeed be increased to 100 per cent. They are permanent, non-negotiable safeguards of the Union, as public ownership always is. Therefore, the profits from each of those stakes should be divided equally among all the households in the United Kingdom. And thus restructured, they provide ready-made alternatives to pay day loans. Think about it. As someone should already have done by now.
Ed Miliband, Jon Cruddas, Maurice Glasman, Stewart Wood, Ed Balls, Chuka Umunna and Stella Creasy, over to you.
The third leg of the stool has just broken, ie; the Co-op, where are we going to get our funds from now.
For younger viewers the stool was Labour, the Unions and the Co-op.
The problem with the Co-op Bank was precisely that it never was a proper mutual.
It was just a bank that happened to be owned by the Co-op Group. Banks may not, legally, be co-operatives.
And then it demutualised the Britannia. We all know what happened next.
Still, not a penny of public money has been needed in order to rescue it.
Onwards to the solution, then: full mutualisation.