The Shadow Chancellor Ed Balls said George Osborne's banking reforms, announced today, do not go far enough:
For all the rhetoric and the partial climbdown he has been forced into, George Osborne is still failing to deliver the radical banking reform we need.
He is refusing to legislate for a backstop power to allow for across the board separation of the banks, as Andrew Tyrie’s commission and Labour called for last year.
He has refused to repeat Labour’s tax on bank bonuses or implement our legislation on pay transparency. And he has failed to get the banks to lend to businesses with net lending to small firms falling month by month.
Launching the Banking Reform Bill today at JP Morgan in Bournemouth today, Chancellor George Osborne will say:
When the RBS failed, my predecessor Alastair Darling felt he had no option but to bail the entire thing out. Not just RBS on the high street, but the trading positions in Asia, the mortgage books in sub-prime America, the property punts in Dubai.
I want to make sure that the next time a Chancellor faces that decision they have a choice. To keep the bank branches going, the cash machines operating, while letting the investment arm fail.
Under the Bill investment and high street banks will also have different bosses and a new watchdog will be set up.
Chancellor George Osborne's message to banks comes after the Parliamentary Commission on Banking Standards, which was set up in the wake of the Libor rate rigging scandal, called for a reserve power for full separation if banks did not implement reforms.
Mr Osborne had warned the Commission, against "unpicking the consensus" over reform proposals in the Bill in November, but appears to have heeded their warnings that loopholes could easily develop.
Sir John Vickers, who chaired the Independent Commission on Banking (ICB), has also said he "would not resist" a complete break up of banks if so-called ring-fencing fails to achieve its desired effect.
But the announcement will put the Chancellor on a collision course with the banks, which claim the legislation will damage London's attractiveness as a global financial centre.
Britain's biggest banks will face complete separation if they flout new rules to ring-fence risky operations from savers' deposits, the Chancellor will announce today.
The new legislation will give the Government and a new banking watchdog powers to "electrify the ring-fence" if banks fail to split high street branch operations from the dealing floor.
Launching the Banking Reform Bill today George Osborne will tell traders at JP Morgan in Bournemouth there will be no more "too big to fail".
It comes after the Parliamentary Commission on Banking Standards, which was set up in the wake of the Libor rate rigging scandal, called for a reserve power for full separation if banks did not implement reforms.