Without the shackles of the Liberal Democrats, George Osborne has been set free in his relationship with the City of London. In Mansion House speech to the City in June, he called for a “new settlement” with banks.
The new settlement effectively means less regulation, less supervision and less tax. And Osborne has made pretty good progress since May.
Firstly, he sacked tough-talking Financial Conduct Authority chief executive Martin Wheatley over the summer for being too harsh on banks. He is now on the hunt for someone who will be less aggressive and more agreeable to bank chiefs. This is a major, under-appreciated shift. Banks now know they can just call up Number 11, complain about the FCA and the chief regulator will be out on his ear.
Secondly, Osborne has shifted the burden of the bank levy from large banks with global balance sheets such as HSBC and Standard Chartered, who can easily get up and leave, and on to smaller banks and building societies, who can’t leave.
This is another huge deal. It flies on the face of getting new banks created and boosting competition in the sector - a key Treasury objective.
And thirdly, this week, Osborne has removed the key recommendation of the parliamentary commission on banking standards – the body set up in the wake of the Libor rigging scandal to fix banking culture.
Under the new senior managers' regime, senior bankers would have to prove their innocence to the regulator when there was major wrongdoing in the organisation.
Regulators normally have to prove someone is guilty before they act but due to the importance and complexity of banking, it was felt they should operate by a tougher rule.
This was a commission led by free market Tory MP Andrew Tyrie and had Nigel Lawson. No socialist firebrands in sight.
But after heavy lobbying from the industry and global banks, such as HSBC again, that has now been removed. The core of the banking commission on the panel reforms has been spiked.
Rumours are now swirling that a climb-down on the other main recommendation of the committee to ring-fence banks risky investment arms from their retail division, could also be watered down too.
Make no mistake: Osborne has caved in to demands from global banks that they will leave the UK if the regulatory and tax burden continues. So he has met all their demands.
The lobbying has been led by HSBC. This is a bank who is under investigation in Switzerland for aiding major tax evasion. It was fined for money laundering failure relating to drug cartels in Mexico. And yet Osborne is dancing to their tune over fear they might up sticks and move to Hong Kong.
There has been a culture shift at Number 11 on its attitude and it is feeding into the sector. Barclays, so humbled after its involvement in epic scandals, has taken up a humble tone in recent years with former chief executive Antony Jenkins launching on a strategic review of the bank. That is now gone. Barclays is about to hire hedge fund giant Jes Staley as Jenkin's replacement in a bid to ramp up the investment division.
Here’s another example of caving to City demands, this time for hedge fund managers.
Osborne’s launched a much-praised raid on non-doms in the summer budget, with distinct echoes of Ed Miliband’s plans during the election campaign.
He said anyone living in the UK for 15 of the last 20 years would become domiciled here. In his budget, Osborne said: “It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.”
But last month, a technical consultation was published that significantly watered down the non-dom tax reforms. It said existing non-doms could keep their money untaxed in offshore trusts even after they become domiciled.
It’s complicated, it’s technical and it is a big deal. Osborne has not met the test he set himself in the budget on non-dom taxation. Very rich people will live in the UK for long periods under differ tax rules. He did it to stop an "exodus" of hedge fund managers, as one tax expert put it to me.
In the last few months, Osborne has overseen what is perhaps the biggest kowtow to the banking lobbying in this country since before the crisis.
So where is the opposition? We haven't heard a peep from Labour on anything when this should be their bread and butter. A Tory Chancellor caving into big banks and hedge funds.
After McDonnell’s shambles in the last two weeks, does anyone seriously believe he will be able to hold the Government account over complex banking policy changes?
Does anyone believe new shadow City minister Richard Burgon – who did not know the size of the deficit when asked on Channel 4 this week – can hold their feet to the fire?
The new settlement effectively means less regulation, less supervision and less tax. And Osborne has made pretty good progress since May.
Firstly, he sacked tough-talking Financial Conduct Authority chief executive Martin Wheatley over the summer for being too harsh on banks. He is now on the hunt for someone who will be less aggressive and more agreeable to bank chiefs. This is a major, under-appreciated shift. Banks now know they can just call up Number 11, complain about the FCA and the chief regulator will be out on his ear.
Secondly, Osborne has shifted the burden of the bank levy from large banks with global balance sheets such as HSBC and Standard Chartered, who can easily get up and leave, and on to smaller banks and building societies, who can’t leave.
This is another huge deal. It flies on the face of getting new banks created and boosting competition in the sector - a key Treasury objective.
And thirdly, this week, Osborne has removed the key recommendation of the parliamentary commission on banking standards – the body set up in the wake of the Libor rigging scandal to fix banking culture.
Under the new senior managers' regime, senior bankers would have to prove their innocence to the regulator when there was major wrongdoing in the organisation.
Regulators normally have to prove someone is guilty before they act but due to the importance and complexity of banking, it was felt they should operate by a tougher rule.
This was a commission led by free market Tory MP Andrew Tyrie and had Nigel Lawson. No socialist firebrands in sight.
But after heavy lobbying from the industry and global banks, such as HSBC again, that has now been removed. The core of the banking commission on the panel reforms has been spiked.
Rumours are now swirling that a climb-down on the other main recommendation of the committee to ring-fence banks risky investment arms from their retail division, could also be watered down too.
Make no mistake: Osborne has caved in to demands from global banks that they will leave the UK if the regulatory and tax burden continues. So he has met all their demands.
The lobbying has been led by HSBC. This is a bank who is under investigation in Switzerland for aiding major tax evasion. It was fined for money laundering failure relating to drug cartels in Mexico. And yet Osborne is dancing to their tune over fear they might up sticks and move to Hong Kong.
There has been a culture shift at Number 11 on its attitude and it is feeding into the sector. Barclays, so humbled after its involvement in epic scandals, has taken up a humble tone in recent years with former chief executive Antony Jenkins launching on a strategic review of the bank. That is now gone. Barclays is about to hire hedge fund giant Jes Staley as Jenkin's replacement in a bid to ramp up the investment division.
Here’s another example of caving to City demands, this time for hedge fund managers.
Osborne’s launched a much-praised raid on non-doms in the summer budget, with distinct echoes of Ed Miliband’s plans during the election campaign.
He said anyone living in the UK for 15 of the last 20 years would become domiciled here. In his budget, Osborne said: “It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.”
But last month, a technical consultation was published that significantly watered down the non-dom tax reforms. It said existing non-doms could keep their money untaxed in offshore trusts even after they become domiciled.
It’s complicated, it’s technical and it is a big deal. Osborne has not met the test he set himself in the budget on non-dom taxation. Very rich people will live in the UK for long periods under differ tax rules. He did it to stop an "exodus" of hedge fund managers, as one tax expert put it to me.
In the last few months, Osborne has overseen what is perhaps the biggest kowtow to the banking lobbying in this country since before the crisis.
So where is the opposition? We haven't heard a peep from Labour on anything when this should be their bread and butter. A Tory Chancellor caving into big banks and hedge funds.
After McDonnell’s shambles in the last two weeks, does anyone seriously believe he will be able to hold the Government account over complex banking policy changes?
Does anyone believe new shadow City minister Richard Burgon – who did not know the size of the deficit when asked on Channel 4 this week – can hold their feet to the fire?
We know Labour will not win the next election. We know Corbyn and McDonnell will never live in Downing Street. But can we at least try and have an effective opposition?
