Osborne backs bank break-up powers

The UK’s big banks will be separated if they fail to follow new rules to ring-fence risky investment operations from High Street outlets, Chancellor George Osborne has announced.

He has said taxpayers are angry at banks’ behaviour and will never again be expected to bail them out.

His speech comes on the same day the government introduces its Banking Reform Bill in Parliament.

Mr Osborne had previously warned against “unpicking the consensus” over structural reform of the sector.

But the chancellor appears now to have accepted a major recommendation of last year’s Parliamentary Commission on Banking Standards which called for a reserve power to “electrify the ring-fence” if banks did not implement reforms.

Ring-fencing the banks to ensure their customers money isn’t recklessly gambled away by bankers indulging in risky investments is an intelligent, sensible, workable idea that would have a lot of support given what happened in 2008.

But as this government has shown previously any big tough decision of this kind that really needs to be made now has been pushed back until after the next election.

So don’t be surprised to see Osborne on the evening news saying we will ring-fence the banks, we will electrify the fence, in 2017.