How Miliband stole a march on local banks

I would be staggered if Ed Miliband ever read any of these blogs.  I would be even more astonished if Ed Balls or any of those other monsters of deficit had done so.  So it must be largely coincidence that, 48 hours after I wrote my blog on doomed lending measures that were still trying to use the defunct lending infrastructure of the big banks - the Labour leader should call for a new regional banking infrastructure.

This is the central economic issue of the moment - the most important thing a UK government could do to boost the economy (I say 'UK' government because most other European countries already have a regional lending infrastructure).

So although I'm glad Miliband has come out and said it, I am frustrated that the coalition has allowed him to do so.

It wasn't as if this is a new idea.  The coalition agreement says:

"We agree to bring forward detailed proposals to foster diversity, promote mutuals and create a more competitive banking industry."

It was in the Lib Dem manifesto.  But bizarrely, most politicians - Lib Dem and Labour - are clinging to the idea that they can force the banks to lend to small businesses, quite oblivious to the truth that they are no longer geared up to do so.  They have no local infrastructure - that's why we need a new one.

There is a new clause in the Financial Services Bill which lays a duty on the regulator to make sure the banking industry is diverse, thanks largely to Susan Kramer and colleagues, but that is all.  We are three years into the coalition, and still there are no bold proposals to create an effective lending infrastructure.  Yes, it is frustrating.

So if he didn't read it here, what explains Miliband's sudden conversion to local banking?  Especially as Ed Balls used to describe these ideas as 'jurassic' - by which I believe he meant they were a little out of date.

The answer that Maurice Glassman is more influential that he seems and Labour's small business task force has recommended it, and he seems to have used the opportunity of his Newcastle speech to run with the idea.  There is a lesson here about how policy gets made: something about opportunities and having the right conversation at the right time.

I hope the coalition will now bring forward their own plans, preferably using a broken up RBS as the basis for a new regional banking network.  

I hope Ed Balls is also onside now.  Nobody wants to find they are the jurassic one after all.