Truss accused of fuelling cost of living crises as Financial Services Bill debated by MPs
Date: 7 September 2022
Campaigns: Food, Trade
Truss accused of fuelling cost of living crises as Financial Services Bill debated by MPs
Deregulation of commodity markets which drove up food and energy prices labelled “perverse” by campaigners
Global Justice Now has accused the government of adding more fuel to the cost-of-living crisis fire today, as it introduces the deregulatory Financial Services and Markets Bill [1] for debate in the House of Commons today. Part of the Bill will revoke rules on commodity trading passed in the wake of the last financial crash, after unrestrained speculation was found to have driven up food prices, exacerbating poverty across the world. Over the last decade, these rules have been watered down. Liz Truss’ government now plans to bin them entirely, a move campaigners have labelled as “perverse” as evidence mounts that speculation has once again driven energy and food prices up [2].
The Financial Services and Markets Bill is a massive, once-in-a-generation piece of legislation which aims to reform the rules around financial services following the UK’s departure from the EU. Aside from the commodity markets reforms, the Bill will also give regulators a new requirement to promote the ‘international competitiveness’ of financial services. Experts have said this is a wholly inappropriate change, which would turn regulators into cheerleaders for the City, unleashing a regulatory race to the bottom [3]. A similar focus around competitiveness in financial regulation in the past was deemed to have contributed to the global financial crash.
During her campaign to become Conservative Party leader, Liz Truss came out as a firm proponent City deregulation, and in particular of scrapping the limits on commodity trading passed after 2008 [4]. Deregulation of the City remains deeply unpopular among voters of all major political parties [5].
Nick Dearden, director of Global Justice Now said:
“Rather than dampening the cost-of-living crisis, these perverse proposals will actually fan the flames. Financial speculators, with no interest in producing or selling food or energy, have driven up the prices of these commodities, forcing millions of people into a crisis. We need to constrain this dysfunctional market, not set it free to do more damage.
“The idea of deregulating the City has virtually no support in British society. And no wonder, because freeing up speculators will be bad for virtually all of us. The lesson of the last three decades is that finance needs to be made to serve society, rather than making society the servant of finance. The Bill goes in the opposite direction. It’s a recipe for inequality and crisis.”
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Notes:
[1] A briefing on the Financial Services and Markets Bill can be found here https://www.globaljustice.org.uk/wp-content/uploads/2022/09/GJN_FinancialServicesMarketsBillBriefing_Sept2022.pdf
[2] https://www.lighthousereports.nl/investigation/the-hunger-profiteers and https://www.ft.com/content/29fcfaed-cde4-450e-9637-c48b945e027f
[3] https://financeforourfuture.org/joint-statement
[4] https://www.cityam.com/exclusive-liz-truss-ill-protect-crown-jewel-city-of-london-as-prime-minister and https://www.cityam.com/liz-truss-promises-post-brexit-bonfire-of-eu-rules-that-hinder-uk-growth
[5] https://www.cityam.com/nine-in-ten-brits-dont-want-financial-services-regulations-to-promote-global-competitiveness. Of 2019 Conservative voters, just 8% support deregulation.
