ALTER departed from its pet subject of Land Value Taxation to suggest an Emergency Motion for Liverpool Conference, which Vince Cable and the Lib Dem Treasury Team supported and adapted. It was debated for 20 minutes on Sunday 9th March and almost unanimously passed as new policy.
Christopher Glover, who helped draft the Motion and introduced it in a 4-minute speech - his first - to Conference, has experience of investigating accounts of major international banks and is an expert witness in banking fraud cases. Christopher admits that his main interest in ALTER is, like others, reform of taxation so as collect economic rent - but also like most ALTER members he recognises the close link between banking, imprudent lending based on inflated property values and the need for tax reform.
The wording of the Motion is below:-
i) Recognises that confidence in the British banking system has been severely dented by:
a. Imprudent levels of bank lending in relation to both consumer credit and mortgage finance;
b. the use of unsustainable business practices by some banks who have achieved rapid growth in consumer lending based on commercial borrowing rather than deposits;
c. the imposition of unreasonably high penalty charges for customers.
ii) Notes the failure of bank regulation and supervision which led to the first run on a UK retail bank for over a century and the Government’s use of tax payer funds to bail out Northern Rock which are yet to be repaid.
iii) Believes that the long period of time taken by the Government to nationalise Northern Rock after it became clear that no suitable private bidder was willing to buy Northern Rock and repay taxpayer loans in a timely fashion has caused considerable damage to the UK’s banking reputation.
Conference therefore calls on the Government to:
1. Ensure that all taxpayer loans to Northern Rock are repaid as quickly as is reasonably possible.
2. Introduce a new regulatory regime to address the inadequacies of the current tripartite arrangements on the Treasury, Bank of England and FSA and strengthen the supervision of UK banks with particular regard to liquidity adequacy, systemic risk and robust stress testing of business models.
3. Confirm the Bank of England’s independence of market supervision- but revise present arrangements concerning their ‘lender of last resort’ responsibilities; in particular ensuring that any bank which receives credit from the Bank of England in its capacity as the lender of last resort, does so on condition that if necessary the Bank of England can take management control.
4. Introduce a new Deposit Protection Scheme paid for by banks - as has proved successful in the United States - to provide 100% cover for personal deposits of up to £50,000 and if necessary allow immediate access for depositors in the event of a bank failure and to make the scheme widely known.
5. To ensure that there is greater banking stability, using capital requirements as a tool to reflect the state of the economic cycle and therefore deter prevent large fluctuations in lending particularly in the housing market.