LEADING ARTICLE: Labour banking on prejudice

Everyone hates banks. Even the Tories imposed a windfall profits tax on them back in 1981. So they make a soft target for a Labour leadership that is keen to appease the party's disillusioned left wing. On this subject Gordon Brown is free to fly the redflag without fear of alienating the general public. Who, having received the customary costly, terse letter from their branch, could fail to relish the prospect of Labour making life difficult in Threadneedle Street?

But we should not allow a personal desire for revenge to cloud reality. Nor should we let Mr Brown gain politically from shallow arguments based on the manipulation of statistics. He is crying wolf by attacking banking profits. It is true that they are particularly high now, but only because the business cycle is at a favourable point. Current high returns compensate for very poor performances during the recession. Heavy losses will no doubt recur come the next economic downturn. Taken over several years, profits are in fact unimpressive. In any case, this year's expected £10bn surplus includes worldwide operations and not simply British high-street customers as the Shadow Chancellor might like us to misunderstand. And although bank charges have risen,the increases affect a minority. Most people keep their accounts in credit and so continue to enjoy free banking. Banks are highly competitive and provide a much better service than a few years ago when they were often run by autocratic managers who seemed to think the customers' money belonged to them.

Some of Mr Brown's proposals are sensible: banks should be required to be more open about charges; they should, for comparison, provide the rates charged by other banks. But Labour's framework of regulation does not offer much of an answer for disgruntled customers. More competition - thanks to the expansion of building societies into banking - is the best hope of further improvements for account holders. We need to be able to vote with our feet.

Today's consumers have higher expectations than their parents, and their anger is fertile ground for political parties. But politicians must be honest about the problems and offer genuine ways of making the public more powerful against large organisations. They should not raise false demons. Otherwise, sooner or later, they will be found out.