Labour leader Ed Miliband will tell bankers in the heart of London’s financial district that they must change or risk social isolation.
At the end of a week dominated by clashes in Westminster over executive pay and bankers’ bonuses, Miliband will tell bankers gathered at Thomson Reuters in Canary Wharf that their industry has “reached a crossroads”.
Miliband will call for a return to “one nation banking” to avoid economic segregation.
“Continuing on its current path will lead to further isolation from society, greater public anger, and an economy which does not pay its way in the world,” Miliband will say.
“This is a call on banking to recognise that it should take the path of change, to recognise that it is not isolated from the economy or society, to recognise that we succeed or fail together.”
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Britain is at risk of becoming “two nations”, both economically and socially, Miliband will warn the bankers, before urging them to lend more to small businesses to create jobs and facilitate growth.
“One nation banking also recognises that these institutions cannot be isolated from the rest of society – that we are once again at risk of becoming two nations in this country, segregated economically, geographically, and socially,” he will say.
Royal Bank of Scotland (RBS) chief executive Stephen Hester waived his near-£1m bonus after coming under intense political and media pressure, while his predecessor Fred Goodwin had his knighthood revoked because of how much his failed leadership had cost the taxpayer.
Meanwhile, RBS chairman Sir Philip Hampton said bankers’ pay is too high and should be “corrected”. But he said the reward offered to Hester, relative to other bankers, was not over the top.
When asked whether there was a danger Hester would walk away from the job after coming into the public eye, Sir Philip acknowledged it had been “challenging” for the chief executive, but said he was a “tough character” who was “dedicated to turning the business round”.
Speaking on BBC Radio 4’s Today programme, Sir Philip said: “I think if this bank is fully returned to profitability by an able management team, that is very much in the interests of the British taxpayer. Stephen Hester and his team are, I think, doing a great job.”
He acknowledged public unease over bonus payments to bankers, saying: “Pay has been high for too long, particularly in the banks, particularly in the investment banks.
“Shareholders have done pretty badly and employees have done pretty well over the last 10 years,” he said. “That needs to be corrected. It isn’t a society or fairness issue, it is a straightforward business issue.”