Brown: No more Madoffs, no more out of control banks

By Alex Smith / @alexsmith1982

On the day that the economy was shown to have grown by 0.2% in the first quarter, Gordon Brown tried to shift the election campaign back onto economic terms with a speech in Coventry.

Taking a firm line on the banks, Brown said:

“ Forget the Prime Minister in me. Forget the Labour Party Leader in me who is fighting for a Labour majority. It is the British citizen in me that fears for our economic future under a Tory government that would, at a time we need to sustain the recovery, take out billions of pounds that could only be delivered by job losses.…I say no more Madoffs. No more RBS getting out of control. No more of the kind of scandal we have seen at Goldman Sachs.”

And he said:

“There will be a triple lock on banks’ misbehaviour. First, there will have to be an explicit annual vote by shareholders, publically recorded on remuneration packages. Second, the Financial Services Authority will set their capital requirements for banks to prevent risky and irresponsible behaviour. Third, we will give the Financial Services Authority a further encouragement that where remuneration contracts are irresponsible they can void them and force a change. And I am the man to carry forward this second vital stage of banking reform so that we ensure the banks serve the public and not the other way around.”

In another event this morning Brown said:

“There is one party in this campaign that wants the focus to be on policy and on substance and that is the Labour Party. There is one policy area that matters above all others – the economy – which means our jobs, our living standards, our public services, how businesses grow and prosper in the months to come.

“For all the hype and excitement of yesterday, today is in fact a more important moment. It is a more important moment for the living standards of millions of people. But as today’s GDP figures show, our economic growth figures make clear the recovery is definitely underway and this campaign has already made clear that the Conservatives are a risk to that recovery.

“As for the Liberal Democrats, the more their policies come under scrutiny the greater the doubts about them and I say to both parties you cannot expect the public to put a cross against a question mark and the question marks about their policies grow every day.

“Now Britain is growing. German growth is flat, Italy has slipped back into recession, Spain is yet to emerge. So let’s be clear, if Britain were to fall back into a double dip recession, jobs would go, growth would go, business would go, mortgages would go and the deficits would start to rise again. Keep our economy growing and jobs come, businesses start to flourish and the deficit comes down. We are not going to make the mistakes of the 1930s and nor are we going to make the mistakes of the 1980s and 1990s.

“Now let’s just look more closely at the figures issued today. In the last quarter of 2009 it is now clear that it was government support, including our VAT reduction and then our car scrappage scheme and other measures for employment that kept the British economy moving forward. In the first quarter of 2010 we now know that the economy grew by 0.2% despite all of the difficulties of these first three winter months, showing the continued importance of government support for the economy.”

Brown’s fulll speech on banking and the economy can be read below:

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“It is a huge pleasure to be here with you today, with young people, with your working lives ahead of you. I am proud of the role this Labour government has played in opening up more apprenticeships to more young people, as we secure the jobs of the future.

These are fascinating times in British politics.

I know that my job is on the line in this election.

David Cameron and Nick Clegg would like to have my job. That is fair enough.

But it is your job that I care about.

And their policies would put your jobs at risk.

It is because I care so much about your jobs and living standards that I will fight, with all the energy and passion I can muster, to win the support for a majority Labour Government that can take the economy and the country forward.

I will never beat Mr Cameron and Mr Clegg on style. But I believe I lead them on substance and policy, and it is substance and policy that is needed to lead Britain.

Today, the latest figures on growth were published. They confirm that the recovery is under way. That is an important and a hugely optimistic moment for all of us.

These growth figures today are in part the result of decisions we took. Not just the huge calls when the crisis was at its height. But the VAT cut so ridiculed by a Tory Party that likes VAT rises. The car scrappage scheme. Enterprise Finance Guarantees for small businesses. Time to Pay policies that helped businesses delay payment of their taxes. Real help from a Government that is resolutely on your side.

And we now know, that in the first few months of 2010, we saw growth of 0.2% – which we estimate is around 600 million pounds.

And so to cut six billion pounds from the economy now, as the Conservative are suggesting, would risk reversing our progress and creating a double-dip recession.

Think back to the days when the world was convulsed by the economic crisis. The warnings of 30s-style depression. The fear of mass unemployment, not seen since the Tory recessions of the past.

They were scary times. I will be honest – there were times when I too worried we would not be able to stabilise things, get the situation under control.

But we did. We made the right calls. We had the right alliances. We took the right action.

And that – allied to the resilience and brilliance of our businessmen and women, the wealth creators on whom we depend, and the commitment and, often, sacrifice of their workers – explains why today’s figures are as they are, defying the predictions of doom and gloom by those who would always talk Britain down.

But the question is always, not the past, but the future: where do we go from here?

And first it means recognising that the recovery is fragile. That we are not out of the woods. That we must do nothing to put the recovery at risk.

Forget the Prime Minister in me. Forget the Labour Party Leader in me who is fighting for a Labour majority. It is the British citizen in me that fears for our economic future under a Tory government that would, at a time we need to sustain the recovery, take out billions of pounds that could only be delivered by job losses.

This country has known recessions before. But what I am seeking to secure, and what I believe is achievable, is that we avoid a Tory double-dip recession that would result from their policies, and instead have a post recession triple boost: growth, rising employment, interest rates low.

None of it is happening by chance. It is happening by choices we made in the past and the choices we are making for the future.

Learning the lessons from past Tory recessions when interest rates were so high that homeowners could not afford mortgages and businesses could not afford to invest; when unemployment continued to rise for two, three, four, even five years after the recession was technically over. That was the Tory way. This is the Labour way.

And the calls being made by Mr Cameron and Mr Osborne now mean they have learned nothing from their own party’s past. They may have changed the wrapping. But scratch beneath the surface and it is the same old Tory Party. Our economy is too important, our hard-earned recovery is too fragile to let these novices play with it now.

So as other European economies show growth slower than ours, let us build on what we have, build a future fair for all.

For this is only the start. People talk of this being our fight for a fourth Labour term. Indeed it is. But it is the first post-economic crisis election. And never were experience and judgement more called for than now.

For this is a moment of big risks and big choices. Get t he choices right: we prosper. Get them wrong: then the bad times return with a vengeance.

Ask me my three priorities here and now – April 2010 – and I tell you: jobs, jobs, jobs.

The world economy has changed forever, and we must adapt. The action we are taking to restore growth will depend on us helping to build the new industrial sectors, the green jobs being created by the switch to low-carbon Britain, the digital economy, life sciences, high-tech manufacturing where we compete on quality. Stay the course and this all means at least one million new skilled jobs in the economy by 2015.

The regions will be central to this. Mr Cameron sneers at what he calls the ‘stuff and nonsense’ of efforts to promote regional economies, but we know government and RDAs can support new jobs in every part of our country.

I stand here today and see the importance to people like you of having work and opportunity and it drives me in my determination to make sure no -one is scarred for life by joblessness. Hence the 200,000 jobs we will create through the Future Jobs Fund, with a job or training place for young people out of work for six months and compulsory work for those out of work for more than two years. We say no to a life on benefits for those who can work.

And we move ahead continuing to make work pay, not just through the historic and rising minimum wage but also with the new £40 better-off-in-work guarantee.

And today we are publishing our housing manifesto – setting out how, literally, we will lay the foundations for the future.

We have kept the construction industry going through the recession – bringing forward investment to protect jobs.

And we have protected homeowners, making repossession a last resort. Repossessions are today running at half the rate of the early 1990s recession. Crucially, and in contrast to the Tory Government in the early 1990s, we swiftly extended support for mortgage intere st payments, and have extended it for the rest of this year. We have scrapped stamp duty for two years for first-time buyers buying houses under 250 thousand pounds and we will keep supporting the house builders by bringing forward investment in affordable homes.

Because life, like government, is about choices. It is about views you hold, the values that count, and the decisions you take.

Be clear that if the Tories had been in charge when the crisis hit, very many more jobs would have been lost as they stood aside and let ‘events take their course’.

On all the big calls: Northern Rock, recapitalising the banks, help for small businesses, support for homeowners and most importantly – the fiscal stimulus backed by every major government in the world – the Conservatives argued for a different and a dangerous course.

If we had listened to them, we estimate as many as 1.7 million more jobs would have been lost. That is the scale of risk these peopl e present to the economy. Wrong decisions. Wrong values. Wrong calls.

And still they have learned nothing. So they call to take billions out of the economy now, when it needs it most. It is the wrong decision. They have the wrong values. It leads them again to the wrong calls.

There would be more jobs lost from reversing the modern industrial policies we know can help lead us from recession to a greener, fairer, more prosperous future.

We are cutting the deficit over four years. They say they will cut the deficit further and faster. But do it now and jobs will be lost not just in the public sector but also among businesses and workforces in the private sector who depend on people’s purchasing power.

The call here is urgent. The risk is now. The danger is real.

But here we are, two years on, growth rising, unemployment stabilised, manufacturing up.

The recovery is fragile, some sectors are still struggling, but I am confident they too will share in rising prosperity as the year goes on.

But not if we see a Conservative government in power on May 7th.

The Tories want to make a number of tax cuts. Inheritance tax cuts for the wealthiest families in Britain. A tax cut for one in three married couples. They want to abandon a planned and necessary rise in NICs. Tax cuts do not come cheap. The money has to come from somewhere. They claim it can come from efficiency savings, once described by Mr Cameron as the oldest trick in the book.

Their sums do not add up. It is why they have stumbled in this campaign. Their economic lack of credibility, every bit as much as Mr Clegg’s TV and PR skills, have put paid to any idea that this is an inevitable Tory procession to Downing Street.

So let me encapsulate the jobs threat from the Conservatives. Unemployment would be higher yesterday, today and tomorrow because of the very policies they have announced. They risk unemployment because they will cut our jobs programmes, cut our school leavers programmes, cut our regional policy and cut our industrial policies that will build the jobs of the future. And they would cut to the heart of our public services – from schools to policing – while at the same time promising an inheritance tax cut for the 3,000 richest people in the country.

Finally, I would like to say a few words on the future of our banks. We have to be sure a crisis like this does not recur.

I am confident that decisions taken already at home and abroad will ensure greater responsibility, closer supervision and a return to bankers taking far greater care with the money of others.

Now we are building the arguments and the alliances to get agreement for a global tax on banks. That is why Alistair Darling is in the US today, building on our proposals for a levy at last November’s G20 in Scotland.

I say no more Madoffs.

No more RBS getting out of control.

No more of the kind of scandal we have seen at Goldman Sachs.

The latest scandal at Goldman Sachs reminds us of how much we still need to agree international banking standards for disclosure, transparency and integrity.

If what happened at Goldman Sachs and in any other bank is proven to be wrong then hundreds of millions of dollars in compensation should be paid to British banks and, because we are the biggest shareholders in many of them, to the British taxpayer.

Our global financial levy will mean a long term shift in resources from remuneration where banks have been rewarding irresponsibility, to the public who have had to bear the consequences of that irresponsibility.

I believe that the Financial Services Authority must have power to strike down untenable practices where the economy is at risk from irresponsible remuneration.

Shareholders will be given new powers to have a say on the pay of their executives before, and not after, the rewards are given.

There will be a triple lock on banks’ misbehaviour.

First, there will have to be an explicit annual vote by shareholders, publically recorded on remuneration packages.

Second, the Financial Services Authority will set their capital requirements for banks to prevent risky and irresponsible behaviour.

Third, we will give the Financial Services Authority a further encouragement that where remuneration contracts are irresponsible they can void them and force a change.

And I am the man to carry forward this second vital stage of banking reform so that we ensure the banks serve the public and not the other way around.

And ours is the government that will reduce the deficit by taking tough and fair decisions on tax and spending while protecting front line services in health, education and the police. Our plan is to more than halve the deficit over four years.

Securing the recovery. Protecting frontline public services. Only one party wants to ta lk policy not polls and presentation. Only one party has a credible, costed coherent plan for the future.

And I believe only one leader understands the challenges we face and how to meet them. That is not David Cameron. Nor is it Nick Clegg.

We have shown we can manage the economy in good times and in bad. The good times are returning. The recovery is under way. We must not let the Tories wreck it.”