City Limits

The recent crisis has raised serious questions about the role the financial services sector plays in the UK economy. One of the most pressing issues for the new Government is how best to restructure the City: how should banking be reformed, without damaging our long-term competitiveness?

The new Government has announced its intention to create “a more competitive banking industry” and also to “reform the banking sector to avoid a repeat of the current banking crisis” but none of the detail is yet clear. It has also announced the formation of a commission, reporting next year, to look at whether retail banking should be separated from investment banking and review other structural issues.

Now is the time to start a sensible, independent, evidence-based and cross-party discussion as to what lessons can be learned from the recent financial crisis, in order to help inform policy: to create the progressive case for financial sector reform.

Demos intends to build a coalition to help rebuild trust between those who work in financial services and their customers. By getting policy right, we can not only correct the weaknesses that have been exposed by the crisis but also improve the contribution that financial services makes to the UK economy.

Led by Kitty Ussher, former Economic Secretary to the Treasury, and chief economist at Demos, the work will:

• Bring together senior industry practitioners with civil servants, Coalition ministers and academics to help produce independent and cross-party recommendations to government in a time-frame that informs their thinking in a useful way.

• Help to build consensus within the UK financial services sector as to what change is required by bringing people together outside of the formal structures of government.

• Build on recent work on the future of the UK financial services sector that has already been undertaken, including but not limited to that of CityUK, the Wigley report for Boris Johnson, and the Bischoff report for Alastair Darling.

• Link in with the best work undertaken in other countries, with particular focus on the US and Europe, working through our contacts with other governments, US think tanks and multinational firms.

• Produce a set of usable policy recommendations for all political parties including areas for further work, with the intention of submitting work to a government consultation. These will be produced in liaison with an advisory sounding board, to inform the evidence base in the report and lend informal and independent expertise to the recommendations.

The project will produce a report, authored by Kitty Ussher, analysing the causes of the credit crunch with a focus on UK-specific factors and providing associated policy recommendations. A series of roundtable events with senior civil servants, senior financial market practitioners, academics, and ministers and trade associations will be held to refine the analysis and the policy conclusions.

To find out more about the project, get in touch with Kitty Ussher.