Labour

Ed Miliband interview on an inquiry into the culture and practices of the banking industry

Ed Miliband MP, Leader of the Labour Party, interview with Libby Wiener on an inquiry into the culture and practices of the banking industry

Tuesday, 3 July 2012

LW:    You called for Bob Diamond to go, he has gone, are you pleased today?

EM:    Well I think it was necessary and right that Bob Diamond stepped down but this is about much more than one individual, it is about the culture and practices of the banking industry. That is why we need a full judge-led independent inquiry to get to the bottom of those practices and make recommendations for change in the future. And I have to say to David Cameron that if he doesn’t order that judge-led inquiry I think he will be failing to understand both the gravity and scale of this crisis. We’ve had missed opportunities before, we’ve got to seize this moment.

LW:    Some people would suggest you calling for a full inquiry is a bit like turkeys asking for Christmas given you were in charge at the time of this wrongdoing. Aren’t you worried about being put in the dock yourself or your colleague Ed Balls?

EM:    Look it’s precisely because what I want to do is the right thing that I am calling for this judge-led inquiry. And of course it will ask questions about the last Labour government, we didn’t get regulation right, just like the Conservative opposition was wrong to be saying our regulation was too tough. So, of course any inquiry will have to look at those issues but also, most importantly, look at the future and how we can change things for the future. I think the last thing the public want is a sense that the establishment is going to cover this up, and try and sweep it under the carpet. Let’s have that full judge-led open inquiry which can get to the bottom of what happened.

LB:    Do you accept that the shadow chancellor for example, Ed Balls, might well be in the dock should there be a full judicial inquiry – he will have to say sorry for what he did?

EM:    Well he has said sorry. He said that we got regulation wrong and indeed, you know, along with governments and regulators around the world and along with the Conservative opposition that said that we should be lighter touch in our regulation. Of course that is right, this is not about, and mustn’t be about politicians saying let’s not talk about the issues of the past. This is about us saying, not just about the past but about the future, most importantly about the future, how we can restore public confidence in our banking industry because that is in all of our interests; all of the people who work in the banks, all of the people who are served by the banks, and the businesses that want to rely on those banks.

LW:    It’s a pretty chaotic situation with Barclays now, we had the chairman going but now he’s come back because Bob Diamond has gone. Are you worried at all about the banking sector now being in a permanent crisis, as it were, because of the leadership problems?

EM:    Well obviously part of the problem the banking sector has is not just recovering from the financial crisis but a crisis of confidence. And that is why it is so important we have this wide inquiry, to try and restore confidence in the sector. And this is the point, unless we can have that open reckoning about what happened in the banking sector, I don’t think either investors or the public will have that confidence. And you know, I am making a parallel with what happened over phone hacking. That we’re having the Leveson inquiry. I hope what will come out of that is a sense not just that we will stop the bad behaviour that we saw in the press but also greater public confidence in our press. I think the same thing needs to happen in this case and I believe it can be done quickly. I believe it can be done over twelve months, it can be a short, quick, forensic inquiry, but led by a judge and out in the open.

LW:    Last week the governor of the Bank of England said something went very wrong in the banking industry. It went very wrong on your watch. Do you think Labour has a lot to answer for, for the way you regulated the City during those years?

EM:    Well I’ve said I think that we didn’t get regulation right, and Ed Balls has said the same thing and we are very open about that. And as I say, I think that we’ve got to learn lessons from that and we are learning lessons from that, but most importantly we’ve got to learn lessons for the future. Regulation is one part of it and we’d like to see the government implementing the independent commission it set up, via the Vickers Commission, in full not in part. Bonuses are another issue. Dealing with those issues because they are part of the problem but also there is this issue of culture and practice. What is it that made, for example, a City trader say I am going to celebrate with a bottle of champagne when I have fiddled and lied and cheated my way in the job I am doing? What is it that has made small businesses across this country be ripped off by complicated products that they didn’t need? What is it that is making people in the banking industry do those sort of things? That is about culture and practice and we’ve got to get to the bottom of those issues.

LW:    And an inquiry led by MPs does not go far enough?

EM:    Well I don’t think that the inquiry that is proposed is either wide enough in its remit, because it is very narrowly focused around the interest rates fixing issue, but I also don’t think it is the arbiter. It is not the arbiter because it needs to be more forensic and I think that is much easier if you have a judge-led inquiry – we have seen that with the Leveson inquiry into the press – and I also think the last thing we need is this descending into party politics. I think if you want to guarantee that doesn’t happen, the best way we can do it is having it independent of a politician. Because if the politicians are investigating the bankers there is always a danger it will descend into party politics, that is the last thing the country wants to see.