Unions call for radical reform of UK banks

The Trade Unions Congress (TUC) is urging the government to implement a major review of the banking sector and to pass legislation curbing executive pay and bonuses.

The Unions, under the umbrella of the TUC, say that three areas of the banking sector need to be looked at. These are the financial stability of banks, how banks operate to support the economy and excessive pay.

Some of these proposals were championed in Sir John Vickers Independent Commission on Banking report, but there are concerns that they may be watered down before being passed into legislation.

TUC general secretary Brendan Barber said: "Banks caused the crash. Their problems are still driving the eurozone crisis. They are still failing to provide the finance that Britain's productive sectors need.

"Yet the Government is still tiptoeing round reform. Even the limited Vickers proposals are being watered down, and initiatives designed to kick-start lending or boost growth end up helping banks, rather than the real economy.

The TUC has its annual conference in Brighton next week and will make its case for a series of changes, including the setting up of a new state bank, representation of employees on company remuneration committees and more competition and diversity within the banking sector.

It wants the government’s Green Investment Bank to be made into a proper bank so that it is able to raise its own funds through the market.

The TUC will also press for the Royal Bank of Scotland (RBS) to become fully nationalized. Currently, it is 81 per cent owned by the UK taxpayer.

Mr Barber believes that increasingly businesses and consumer groups are supporting the union’s calls for banking reform.

He said: "It is not just unions backing a radical shake-up. Proposals we make also find support among business leaders, consumer groups and even some ministers."

This week, the Bank of England published its latest quarterly “Inflation Attitudes” survey which showed public confidence in the effectiveness of the central bank is at the lowest level since records began in 1999.