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Lib Dem leader says date of implementation for banking reforms could be far earlier than that recommended by Sir John Vickers' Independent Commission on Banking
Nick Clegg, the Lib Dem leader and deputy prime minister, has said banking reforms designed to prevent another taxpayer bailout of the system will be implemented "well before 2019".
Clegg said he believed the date of implementation for reforms by Britain's biggest banks could be far earlier than the one recommended by the Independent Commission on Banking chaired by Sir John Vickers.
The commission's report, published earlier this month, said banks should ring-fence their high street banking businesses from their "casino" investment banking arms. But it gave Britain's biggest banks until 2019 to do so – longer than had been expected.
Clegg said he was "pretty confident" that the 2019 deadline was merely a "backstop date" and he wanted the legislation in place "as quickly as possible".
"As long as we legislate during this parliament I suspect actually the changes will be implemented well before 2019," Clegg told the BBC Radio 4 Today programme.
His claims appear at odds with the line issued by David Cameron last week. The prime minister said the 2019 deadline had been recommended so that the UK reforms coincide with the date when new international capital standards must be in place.
The Liberal Democrat leader outlined his views on the timeline for change as he underlined his party's determination to deliver changes in the way that banks operate, including pay and bonuses.
Asked when the legislation on the Vickers recommendation would be introduced, he said the government would "legislate in full" by the end of this parliament so that there was there was "no risk of slippage and somehow kicking it into the long grass".
"On that we have been utterly unambiguous," he said.
He said he would like the measures to be included in the financial services bill, which has just started its passage through parliament, if it were possible to do so.
But he added: "I think all of us at the top of government, including the chancellor, would like to see this done as quickly as possible. Quite sensibly, George Osborne [the chancellor] and the Treasury have said this is an immensely complicated issue, exactly as I have discovered as I have delved into the technicalities of how a ring-fence would work.
"It's extraordinary technical, but we are not going to make promises about doing it more quickly than we think we might and we need a little bit of time to get the details right. Vickers has said all of this needs to be implemented by, at the latest, 2019. I'm pretty confident that basically is a backstop date."
Speaking as Lib Dem delegates congregate for the fourth day of their annual party conference, Clegg was also quizzed on whether he had softened his stance on bank bonuses, which he had previously called "gratuitously offensive".
He admitted he would have liked more progress, but said that those at the top of banks in state ownership had "legally watertight" contracts signed before the coalition came into power.
He cited Project Merlin – a deal struck earlier this year under which the largest UK banks pledged to lend about £190bn to businesses this year, including £76bn to small firms.
Clegg said progress was being made but he made clear that if banks did not deliver on the Project Merlin deal then "all bets are off".
He also used the interview to defend the government's deficit reduction strategy, arguing that changing course now would be "exactly the wrong thing to do".
Citing the downgrading of Italy's ability to service its own debts, he said governments that do not show the political will to balance their own books "lose control over their own destiny".
But he added that deficit reduction alone was not the "magic recipe for growth".
"Deficit reduction is not everything," he said. "You don't create growth simply by balancing the books. There are other … there are so-called supply-side measures, you bring taxes and regulation down for businesses, but there is also – and this is the thing that we've been talking about more in the Liberal Democrat conference – there are things government can do to stimulate both confidence and demand."
On the Eurozone crisis, he said no one foresaw that the rules set up when the eurozone was created would be so spectacularly ignored and broken. He blamed French and German governments for not "looking after their affairs properly", leading to problems throughout the eurozone.
Clegg said he thought it very unlikely that Britain would join the euro while he was Lib Dem leader.
"I doubt very, very much that, during my political lifetime, certainly as leader of the Liberal Democrats, that we will see the UK enter into the euro," he said.
And he reaffirmed that the he intended to "see this coalition through" to the general election "and beyond", as he played down suggestions his wife had pleaded with him to leave his position in 2015.
"There are so many things I want to tell you in this very intimate conversation when no one's listening but I can't tell you about conversations Miriam and I have.
"I hope you don't mind. I'm just going to draw the line there."
- Liberal Democrat conference 2011
- Banking
- Banking reform
- Financial sector
- Banks and building societies
- Economic policy
- Liberal Democrat conference
- Liberal Democrats
Hélène Mulholland
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