Backing off from bank reform

Experience to date tells us that when "government sources" say something different to Vince Cable about a policy outcome then its the sources that are likely to be right. This lesson would appear to apply to the ConDem's troubled banking reforms where any shake-up of the present system seems unlikely to come into effect before the 2015 general election.

The Business Secretary insists that legislation to separate the investment and commercial parts of leading banks is imminent. However, treasury officials are telling financial journalists that the "practicalities" involved means it will take several years to implement. They also imply that a series of "exceptions" are under actve consideration.

Political commentators sense that Conservatives are back-tracking on earlier commitments to protect taxpayers from having to cough up for the costs of possible future meltdowns in the financial sector. The phrase coming from Chancellor George Osborne's office is that banks should be given the "breathing space" they have been calling for to build up their financial strength.

Very few observers think that the Lib Dems have the desire - or the gumption - to go to wire over this one. The fact that it is an expendable Vince Cable mouthing disatisfaction and not Clegg is sufficient sign of a pending acquiesence, albeit wrapped in some rationalisation or other.

As ever, Lib Dem influence over government policy is vastly overstated.