Cathy Jamieson MP, Labour’s shadow financial secretary, responding to the Chancellor’s letter asking the Bank of England to review the FPC’s powers on bank leverage ratios, said:

“After his sudden U-turn on payday loans, George Osborne is once again bowing to pressure in order to head off an embarrassing defeat in the House of Lords.

“Rather than showing the leadership we need to radically reform the banks, George Osborne is reluctantly backing down in the face of arguments from Labour and the Parliamentary Commission. It was right for the Parliamentary Commission to insist that leverage ratio direction powers should be given to the Bank of England and the Chancellor has calculated he would lose the vote on this.

“It’s also clear that these climb downs have been made in a last-minute panic because the government has failed to table an amendment to the Banking Reform Bill today on capping the cost of payday loans.

“We now need a more significant change of heart from the Chancellor. Labour will keep pressing for a tough and annually renewed licensing regime for senior bankers and a backstop power to allow full separation of retail from investment banking if ring-fencing fails.”

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