We Need New a Model; Localise West Midlands, the Digbeth-Based Think-Tank, Is Calling for a Radical Change of the Banking System. Andrew Lydon, Who Leads the 'Bank of Britain' Feasibility Project for the Campaign Group, Outlines the Results of His Study AGENDA
Byline: Andrew Lydon
Over the last year or so, we in Localise West Midlands, have been doing feasibility work on reforming of the way central banking works in the UK.
In what we have come to refer to as our 'Bank of Britain' project, we have been assembling material for arguing that the UK central bank should be more representative of the various economies that make up the UK.
We saw the need for a bank that was less a creature of Downing Street and Westminster.
In this recent crisis, what none of our supposedly national media have noticed is that the further a bank has been based from London the more likely it is to have ended up in a mess.
We hoped that through more responsive and proportionate control over inflation and credit, we could allow the UK economies to find their way towards a more successful model.
We were active in seeking to foster the discussion but, increasingly, decision makers and commentators' attention was focused on the mechanical responses to bank failure and bail-out rather than the path to future success and sustainability.
Until only days before the banks asked for the government to take a stake in their ownership, no-one was publicly talking about this as a way forward.
Now, faced with what has happened, we have been revising our project road map. While there were many who have in the past sought the nationalisation or partial nationalisation of the banks, none would have really wanted to see them fall into the public's hands as basket cases.
None would have wanted to see government sinking billions into the process in the middle of an existing economic crisis. However, what is needed is a basic idea of what to do with these banks.
What we taxpayers have ended up with is a decisive stake in a broken but increasingly centralised, leaderless but monopolised industry.
Remember competition considerations were already dispensed with to save HBOS. Once the crisis subsides, some might be tempted to seek the rapid recouping of money for the taxpayers by getting the mready for sale - forwhichthe monopolised hulks would be allowed to continue their tradition of poor returns to savers to fatten their balance sheets.
We would be re-privatising the sehulks againratheras Boris Yeltsin would have done it (or maybe as we privatised our water industry).
One should not be surprised to find money from Russia seeking to get involved in any such potential rip-off.
But a better solution would be for us to bring in the Competition Commission and ensure that the banking system from which the taxpayer withdraws is a more competitive and diverse one than it would otherwise be, with better structures of governance installed. When the UK power industry was privatised, some might have thought something like that had happened with the flotation of the regional electricity companies.
But that only serves to show how appearances can be deceptive, because the hope of profits for the millions of new shareholders was based upon it being known that there were investors wanting to come along quite quickly and buy up their shares to create amalgamated energy companies: firms thatwould end up becoming what we now call the 'Big Six' who rip us off daily.
Most of the cars running on the roads of Europe today are compact with shortened engine compartments, have front wheel drive with an engine running across the car from right to left.
That format was pioneered here in Birmingham with the Mini at Longbridge.
But the company that owned it hardly made any profit on it - ever.
That sort of poor industrial leadership led our banks away from investing in production and towards the sort of system we have since had. …