Osborne lays out his support for Vickers

George Osborne made a firm statement on the Vickers report this afternoon; if he felt uneasy about the proposed abolition of his seat or Natalie Rowe’s latest sally against him it didn’t show.

As expected, he accepted Vickers’ proposals “in principle”, giving himself and his coalition partners enough room to manoeuvre within an agreed timetable that is equitable to both parties.

Osborne also said that the annual £7 billion burden of Vickers’ capital requirements “should fall on shareholders and the wholesale debt holders, not small depositors or taxpayers.” Politically, it’s imperative that he achieves that objective. There is yet uncertainty on the subject and Barclays sought a clarification earlier this afternoon.

Osborne finished by reprising one of his favourite strategic memes: that the coalition takes action where Labour dithered. These reforms might have come ten years ago, he said.

The session was of interest to see where Labour, so vulnerable on this ground after its record in government, would jump. With typical canniness, Ed Balls prostrated himself before the chamber and offered his “most humble apologies” for not regulating the banks more closely in government. This was a ruse designed to embarrass George Osborne into contrition. Denied an apology by an almost contemptuous Osborne, Balls turned his fire onto the proposed timetable, which will delay implementation until 2019. He argued that Vickers’ proposals must be in force sooner, clambering onto the bandwagon recently vacated by Vince Cable.

Alistair Darling submerged several astute and cutting points in a dryly witty speech. the former chancellor said that Vickers’ proposals are not infallible and that capital requirements cannot entirely eradicate natural risks. He later told Radio Four’s PM programme:

“There are two misconceptions here that have to be dealt with. The first that somehow retail banking is safe, investment banking is not. It was the retail lending activities of HBOS that brought it down, it was the retail lending decision of the Irish banks that led to their collapse. Equally, the idea that no Government would ever have to bail out any investment bank is simply nonsense.”

Darling is, of course, right that there is no one cure to these problems. But the feeling around Westminster and in government circles is that Vickers’ proposals go some way to addressing the dangers inherent to the still loathed banking industry. It is of enormous political importance for that reason.