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Put focus on regulation

If it is ever possible to attach the adjective “exciting” to a pre-Budget report presented by Alistair Darling, then next week’s is the one.

It is not just that the tax and spending row which has broken out between the Conservative and Labour parties will mean the Commons chamber will see the heat of some proper debate next week.

It will be that the Government will face proper questions on all manner of measures designed to boost our ailing economy and voters and taxpayers will get a chance to see which version Labour, Tory and indeed Liberal Democrat they like best.

Of course, there are three other seats of Government within the UK but for the moment at least most of the economic levers reside in Downing Street.

The debate has changed radically in the last few months. Considering the choices at hand, it almost feels as if “we are all Keynesians now”. The big political debate appears to be a matter of degree.

It is not our role as a trade paper to take a stand on borrowing or spending levels although we do have strong views on the shape tax should take as it applies to financial products if not to the overall burden.

What does concern us is the matter of regulation. We would like to see better regulation applied to City of London and to banks. It needs to stop being a glib term and start to mean something.

A market needs to be free but not so free that on occasions it can nearly destroy itself. That means it needs the right regulations or at least as close to the right regulations as is humanly possible.

In terms of the retail market, next week’s retail distribution review paper is likely to provide some grand boasts made about an agenda for change.

We would hope that in the Chancellor’s speech next Monday and in the subsequent RDR paper the next day that some of the more worthwhile goals are preserved.

But one lesson that we assume Government and regulator have learned but that is worth repeating again is that it is when the big things and the big firms go wrong that the whole system is endangered and that is where regulation should focus most.

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