Tony Bonsignore: Bankers dismiss Bragg's populist pay protest at their peril

THE campaign by singer Billy Bragg to encourage people to withhold their taxes in protest against Royal Bank of Scotland bankers' pay has itself now attracted some pretty extreme protests.

Some have accused the famously left-wing singer of attempting to incite anarchy, even of trying to overthrow the capitalist system and tear up the very fabric of society. Less hysterical detractors, meanwhile, have argued that Bragg is wrong to demonise RBS staff in isolation, and that the underlying issues are far more complex than he admits.

Even if he has picked the right fight, these critics say, he has selected the wrong tactic – Bragg would be better turning his ire on regulators and politicians, and focusing on the need for fundamental reform of the financial sector.

The first of these criticisms against Bragg can be easily batted away. Most people will be unable to participate, given that they pay their taxes through PAYE. As the Bard of Barking himself points out, this is hardly a recipe for a nationwide tax revolt.

In any case, given Britain's recent history in protesting, there seems little prospect of mass civil disobedience, and the campaign by the 52-year-old singer has about as much chance of overthrowing the capitalist system as a Scottish football club has of winning the Champions League.

One cannot help but suspect, in fact, that such hysterical protestations have much more to do with the desperation of a privileged few to maintain the status quo than they do with the reality.

Other more measured criticisms of Bragg's campaign, however, are more difficult to deflect.

It is certainly true that the problems go far deeper than pay and bonuses at RBS, and that a root-and-branch reform of the financial system is needed.

Risks and rewards in the banking sector need to be better aligned. All bankers need to become responsible for their own actions, either through being cut down to size or through some sort of pre-funded financial crisis levy. After all that has transpired over the past two years, it is remarkable and dispiriting that there remains so many institutions considered "too big to fail".

And it is true, too, that overall incentive packages need to be moderated to bring them back into line with other more "socially useful" professions, to borrow Lord Turner's memorable phrase.

The whole culture of Anglo-Saxon shareholder capitalism needs to be reoriented so that institutional investors take their responsibilities more seriously, and that the ultimate owners of capital – often you and I through our pension funds – are better protected and served.

Fund managers, for example, should hang their heads in shame at their collective failure to quiz the bankers more closely, although since they were (and still are) paid in hefty annual bonuses, it is unsurprising that they should be so myopic in their oversight.

Against this broader background, then, critics of Bragg are right to point out that bonuses to RBS staff are only a small part of the overall picture, and are as much a symptom as a cause of current woes.

At the same time, however, the Bragg baiters fail to appreciate the growing and potentially explosive public anger at all bankers that is at the heart of this campaign – an anger that has to be expressed somewhere, particularly when observers such as Bragg notice that bonuses have been sanctioned by Chancellor Alistair Darling.

How is this possible, he asks, given the widespread anger felt by the public at this iniquitous state of affairs? Is Darling working for the voters or for the City? Why are the politicians not listening? Must angry taxpayers take matters into their own hands to force action?

Bragg freely admits that this is a desperate move, but one prompted by a feeling of complete "powerlessness". And here, surely, is the central importance of Bragg's campaign, and of the public debate it has stimulated.

For people do indeed feel utterly powerless, angry at the injustice of bankers' bonuses but knowing of no way to make that anger properly felt.

Worse still, many suspect that there is no way of making their voice heard – that this whole distasteful money merry-go round will continue whatever they do and however they vote at the next general election.

• Tony Bonsignore is a City-based financial journalist