Ahead of the report by the parliamentary commission on banking standards, due to report back this week on the future of RBS, Unite, Britain's biggest union, has called on the government to have the bravery to support businesses, communities and staff by committing to the full nationalisation of RBS.
The commission's forthcoming report will intensify debate about the future structure of RBS, with the government sending ever-stronger signals that it wants to sell-off the country's shares in both RBS and Lloyds. A quick sell-off could end up short-changing taxpayers. The government's handling of Stephen Hester's resignation led to £1 billion being wiped off the RBS share price on Thursday (13 June).
However, Unite, which represents 120,000 staff in financial services and has significant membership across the private sector, believes 'RBS should become the "dynamo" to drive the UK out of the economic doldrums through lending and support to businesses and communities'.
Banks have consistently failed to lend to support small businesses despite government instructions to do so. Initiatives such as 'Project Merlin' and the 'Funding for Lending Scheme' have both failed to provide adequate access to finance (see notes to editors), with recent Bank of England figures showing that net lending by state backed Lloyds and RBS actually fell by £2.6 billion in the two most recent quarters.
Unite is urging the government to put the national interest before short-term, political opportunities and create a nationalised bank committed to fulfilling the needs of society and the real economy. This would include the creation of a properly resourced 'British investment bank' to provide finance for infrastructure investment and to small businesses.
All of the G8 countries, except the UK have some sort of state backed lender for small and medium size enterprises (see notes to editors).
Unite general secretary Len McCluskey said: "It is wrong for the government to push only for a RBS sell-off when the banking sector is clearly not fit for purpose in its present form.
"The bank is not lending to those who need it including businesses and individual customers. The banking sector is still addicted to dishing out enormous rewards to an elite few, and has yet to offer diverse, local forms of banking.
"RBS should become the dynamo which helps drive the UK out of the economic doldrums through lending and support to businesses and communities. This would repay British taxpayers by building a British investment bank. Powerhouse nations like Germany use their banks to promote jobs and growth for future generations.
"So instead of looking at the bottom line, or pocketing some cash ahead of a general election, we urge the government to have the bravery to think differently. Create a bank that works in the national interest, including a 'British investment bank' to provide finance for infrastructure investment and to businesses.
"Going back to business as usual would be a lost opportunity on a colossal scale. Instead the government could make history and reshape banking to support the real economy."
A state-owned bank could
- Increase lending to viable businesses
- Lend to local councils to fund a mass council house building programme
- Lend funds for a significant investment in green infrastructure such as rail and green energy
- Support UK staff at the bank with living wages.
- Stop the payment of irresponsible bonuses and disproportionate pay awards to those engaged in 'casino banking'
- Lend to individuals to offer them an alternative form of credit to the legal loan sharks (pay day lending) who provide emergency cash, but at extortionate rates.
Contact Ciaran Naidoo on 07768 931 315
Notes to editors:
Project Merlin is an agreement signed in 2011 between the government and Barclays, Lloyds Banking Group, RBS and HSBC with the intention of promoting lending to businesses, particularly small businesses, curbing bankers' bonuses and promoting executive pay transparency.
Funding for Lending is a scheme introduced in 2012 which allows the Bank of England to lend money at below-market rates to banks, and monitor their progress in lending the cash out to firms and households.
All the G8 countries except the UK have some sort of state backed lender for SMEs (the UK's Green Investment Bank, is a fund rather than a bank).
- Canada - Business Development Bank of Canada
- France - Caisse des Dépôts et Consignations (CDC)
- Germany - Kreditanstalt für Wiederaufbau (KfW)
- Italy - Cassa Depositi e Pretiti (CDP)
- Japan - Japan Finance Corporation Small and Medium Enterprise Unit
- Russia - Russian Bank for Small and Medium Enterprises Support
- USA - Small Business Administration (SBA)
Unite is Britain and Ireland’s largest trade union with 1.5 million members working across all sectors of the economy. The general secretary is Len McCluskey.