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'Extractive' banking sector needs reform - Opposition leader Corbyn
March 3, 2016 / 1:16 PM / in 2 years

'Extractive' banking sector needs reform - Opposition leader Corbyn

LONDON (Reuters) - The banking sector needs to be reformed to stop it treating businesses and consumers as “cash cows”, the leader of Britain’s Labour Party said on Thursday, words which may further distance companies from the opposition party.

Britain's opposition Labour Party leader Jeremy Corbyn speaks at the British Chambers of Commerce annual conference in London, Britain March 3, 2016. REUTERS/Peter Nicholls

In his first address to a business audience since taking on the leadership role in September last year, left-wing lawmaker Jeremy Corbyn said the government had outsourced economic policy to London’s financial centre and called the way banks treated small- and medium-sized businesses as a “textbook of failure”.

Almost a year since Labour suffered a crushing defeat at a national election on concerns it could not be trusted with the economy, Corbyn pressed his argument that there should be more investment by the state to spur growth.

“The banking sector has to be reformed, finance must support the economy and not be an extractive industry treating consumers, entrepreneurs and businesses as cash cows,” Corbyn told the British Chambers of Commerce conference in London.

He said public stakes in banks such as Royal Bank of Scotland (RBS.L) should be used to “drive lending and investment and rebuild supply chains” and a national investment bank should be created to boost areas such as infrastructure.

“We need a national investment bank at the heart of economic policy to target investment on key public and economic priorities not just for very quick returns,” he said.

Labour was criticised for lacking economic credibility in the run up to the parliamentary election in May last year, and many of its policies were seen as anti-business.

Corbyn, whose election was seen as a shift back to the left for Labour, said there needed to be a “new settlement” with the corporate sector which put the interests of the public and workforce ahead of short-term shareholder interests.

One audience member, who worked for a bank but declined to be named, told Reuters the Labour leader seemed out of touch with the business community and should engage with companies more to better understand the real issues they are facing.

“You may not like everything we say but when it comes to big decisions on the economy, infrastructure, skills and investment,” said Corbyn, who did not take questions from the audience after his speech.

“We are actually natural allies because Labour is committed to what is needed for business to expand and succeed. We expect businesses to put more back into the economy but we will do more to give the economy a strong future.”

Reporting by Kylie MacLellan, editing by Elizabeth Piper

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