BANKING REFORM – Unlocking investment.

SINCE becoming your Member of Parliament, I have visited many businesses of all types and sizes in this constituency and I have been contacted by many others.

A recurring theme has been along the lines of expressing concern about the performance of the banking sector.

Several times during the last year, I have highlighted in parliament and with ministers the key issues behind these concerns, including a lack of lending to small businesses, a tendency to centre almost exclusively on asset value and an inadequate understanding of business prospects.

Enabling sensible lending to take place matters to employment, innovation, exports, investment, productivity and competitively.

This is why the coalition government has moved as swiftly as possible to reform the banking sector following the disastrous consequences of poor regulation and the current structure of UK banking.

Following Sir John Vickers’ report on banking, the Chancellor of the Exchequer has acted to begin the process of reform.

The package is complicated and will require careful deliberation but three main recommendations have been made.

Firstly, high street banks should be separated from wholesale investment banking activities.

This will be achieved by ring fencing and, therefore, providing protection for the saver and small investor. High-street banks will be strengthened and, by definition, more focused on traditional customers.

Second, banks will be required to have bigger cushions to absorb losses.

This, essentially, should prevent the lack of credit and, of course, the need for the taxpayer to intervene.

Thirdly, competition in the banking sector will be radically enhanced so that customers - especially businesses – will be empowered and emboldened when dealing with bankers.

Taken together, these reforms should create a new culture in banking and, in turn, give a boost to our local economy.

If you would like to discuss the issues raised above, please contact me on 01453 751572 or visit my website www.neilcarmichael.co.uk Happy New Year, Neil Carmichael.