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Be socially useful, Welby tells banks

02 November 2012

THE Government should support only banks that "have a clear and explicit social value", the Bishop of Durham, the Rt Revd Justin Welby, said last week.

Speaking to financiers in Zurich last Friday, Bishop Welby, who is a member of the Parliamentary Commission on Banking Standards (News, 20 July), said: "In the same way as the ruins of Coventry Cathedral were turned from a hideous symbol of destruction to a symbol of hope of resurrection, of peace, and a new form of civilisation, so finance can move from being the wreckage of a hubris-induced disaster, to retrieving its basic purpose of enabling human society to flourish effectively. To put it in one sentence, there is a need for socially useful purposes for banking and financial services."

Bishop Welby suggested that the Government should offer financial support only to banks that "have a clear and explicit social value"; and that banks that demonstrate a "social purpose" should "receive an easier tax regime and a lighter regulatory touch". He also said that it was "essential" that "the process of separating investment banking from . . . utility banking" should continue.

Bishop Welby's speech gave some insights into the work of the Parliamentary Commission on Banking Standards, which is scheduled to report before 18 December, in time for its recommendations to be included in the Banking Reform Bill.

The Commission had been looking at how to restore confidence in financial institutions, he said. The evidence it had received from bankers "has said effectively, 'This was an unfortunate moment of carelessness, we are very sorry, but let's keep going forward and pretend that it didn't really happen.' "

By contrast, the evidence given by civil society groups "could perhaps best be summed up with the French expression of 1789: 'À la lanterne'", the lamp-post used by mobs in Paris for lynchings during the French Revolution. Before the financial crash of 2008, financial markets "had no socially useful purpose. The industry was referred to as financial services, but in fact it served nothing."

Bishop Welby said that one of the "socially useful purposes" of banking was "to harness the power of finance as something which crosses boundaries. . . Financial services have huge potential as vehicles of the common good in order to unite increasingly autonomous and disparate societies."

Speaking on Monday evening at an event in London organised by Occupy London (Features, 12 October), the Executive Director for Financial Stability at the Bank of England, Andrew Haldane, said that the Occupy movement's voice had been "both loud and persuasive, and that policy-makers have listened. . . We are in the early stages of a reformation of finance, a reformation which Occupy has helped stir."

Mr Haldane said that the Occupy movement had been "successful in its efforts to popularise the problems of the global financial system for one very simple reason: they are right."

The Cabinet Office Minister, Nick Hurd, told a meeting of the Cinnamon Network charity last week that the Government wanted to work with Churches and Christian organisations to promote social enterprise.

Living Wage. A survey by the accountancy firm KPMG, published on Monday to coincide with Living Wage week, suggests that one in five workers in the UK - 4.82 million people - are paid less than the Living Wage. The Living Wage, which employers are not obliged by law to pay, is £8.30 an hour in London and £7.20 in the rest of the country.




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