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Miliband: Banks May Be Broken Up Under Labour

(c) Sky News 2012

Ed Miliband has threatened to forcibly break up Britain's biggest banks if they do not go far enough with reforms intended to avert another crash.

The Labour leader was speaking on the eve of a Labour Party conference at which he is under pressure to set out his alternative to the Conservative/Liberal Democrat coalition.

Banks have been given until 2019 to ring-fence high street operations handling consumer and small business accounts from high-risk "casino" arms within the same group.

But the Opposition accuses Chancellor George Osborne of watering down reforms called for in the Vickers review in the face of lobbying by the industry, and moving too slowly to force change.

Mr Miliband - who is using the conference to unveil a series of policies to protect consumers from big business - said a Labour administration would legislate if major changes were not in place by the 2015 general election.

"Either they can do it themselves - which frankly is not what has happened over the past year - or the next Labour government will, by law, break up retail and investment banks," he said.

"We need real separation, real culture change. Or we will legislate. If they don't do it voluntarily, embrace the change Britain needs, then we are going to have to do it by law."

Labour said that action would be taken unless there was evidence of a cultural change as well as the implementation of the "letter and spirit" of the Vickers report, including splitting staffing and corporate governance.

Pressure for dramatic change has intensified following the emergence of the Libor-fixing scandal and further revelations of mis-selling by the high street banks.

Mr Miliband earlier used a pre-conference public question and answer session to warn of a "genuine economic emergency" facing the UK and present Labour as the only party with the policies to tackle it in a fair way.

But amid pressure to put flesh on the bone of Labour policy he stressed repeatedly that he could not make pledges to reverse coalition spending cuts - saying his would be a government that "under-promised and over-delivered".

"I'm not going to wave a magic wand," he said. "But I do believe we could make a difference."

Mr Miliband is under pressure to improve poor personal ratings and faces union demands to give more support to public sector workers.

Meanwhile, shadow chancellor Ed Balls has been increasing pressure on Chancellor George Osborne, calling for a two-year stamp duty holiday for first-time buyers.

He told the Sunday Telegraph that suspending the levy on properties worth less than £250,000 would help revive the housing market and wider economy and that he would set out how it could be afforded in his conference speech.

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