Joyce McMillan: Banks give free market a bad name

IS £100bn of bonuses since the financial crash really how we want this country to be run, asks Joyce McMillan

One of George Osbornes plans to save money means slashing the benefits of people with severe disabilities. Picture: Getty
One of George Osbornes plans to save money means slashing the benefits of people with severe disabilities. Picture: Getty

THE last time the story hit the headlines, in November of last year, Channel 4’s feisty economics editor Paul Mason stood in the street outside the London headquarters of the Royal Bank of Scotland and delivered a furious rant straight to camera; this time, I wouldn’t be surprised if some equally irate commentator were to abseil down the facade of Barclays’ head office in a Batman costume, threatening to drive the evil-doers out of Gotham for good.

The story in question, of course, is the one about how traders in a consortium of big banks – including Barclays, RBS, JP Morgan and Citigroup – got together to fix global foreign exchange rates, to the benefit of themselves and their businesses, and the great disadvantage of everyone else.

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No-one seems able to calculate how much money this scam actually made for the banks in question. But at any rate, their conduct has been rated so seriously by the US Financial Conduct Authority that they have now been ordered to pay some of the highest fines in banking history, a total of $6 billion (£3.8bn) across the six banks involved.

So far, so familiar; and still, most people in Britain remain utterly baffled as to why no individuals have been prosecuted for carrying out or encouraging what are clearly fraudulent practices, either before or since the financial crash of 2008. Now that the UK has made its electoral choice, though – and decided by a narrow margin to continue for another five years with the government of David Cameron, closely entwined as it is with finance-industry cash, interests and lobbying – the question of what is to become of this unsustainable “rogue” form of capitalism begins to seem ever more urgent.

It’s not only the continuing stream of scandals, after all, which suggest that these huge institutions are still shot through with a short-term, “loadsamoney” culture that often ignores basic rules of contract, never mind any idea of ethical conduct, trust, or stewardship. It’s also our abject failure even to begin to address the absurdly inflated patterns of remuneration that begin in the financial sector, and are now beginning to distort the whole of British public life. Since the crash of 2008, for example, our allegedly penitent UK banks have paid out a staggering £100bn in personal bonuses; a sum easily capable, if divided into annual chunks over seven years, of filling the £12bn gap in Britain’s public finances that George Osborne says must now be closed by, for example, slashing the benefits and quality of life of people with severe disabilities.

And politically, there are three observations worth making about this state of affairs. The first is that despite the pallid performance of the Cameron-led government in actually tackling any of these abuses – as opposed to talking fluently about doing so – even some Tories are now becoming actively concerned that this bloated, finance-driven and heavily subsidised model of capitalism is bringing the whole idea of a free market into disrepute. This week, for example, David Cameron’s former adviser Steve Hilton, still a loyal Tory, was to be seen buzzing about London promoting his new book More Human, in which he denounces Britain’s pampered and overpaid elites, wonders why anyone really needs to be paid more than the £250,000 a year picked up by top civil servants, and characterises modern Britain as a decaying democracy where policy can be bought, and the genuine voice of the people is rarely heard.

Secondly, it’s becoming clear that it will be many years, at best, before we can look to the Labour Party for any sustained effort to mend this broken system. So far, the Labour “leadership” debate has consisted mainly of a grim series of post-Blairite clones repeating the mantra – factually false, if you look at the results – that Labour lost the election because it was too left-wing, was not business-friendly enough, and had not succeeded in banishing every hint of trade union influence from its affairs.

What this strange generation of blank-eyed careerists fail to grasp, though, is that if their analysis is correct, then the Labour Party might as well shut up shop now. What Britain needs now – but seems unlikely to get – is an opposition party which forgets its traditional left-right paranoia, and simply begins to deal in reality; to expose the economic lies being told by the present government, to oppose cruel and unworkable social policy largely based on delusional headlines in the popular press, and, above all, to nail the myth that “there is no money”, at a time when we’re told the offshore coffers of the super-rich are awash with cash, just wandering the globe in search of high short-term “yield”. Which brings, us finally, to the 56, Scotland’s new SNP MPs, and the unexpectedly prominent role they may find themselves playing, as a centre-left Westminster opposition party in relatively good heart. It’s always unwise, of course, to overstate either the radicalism or the coherence of the SNP; the truth is, though, that, given the state of Westminster opposition politics now, the party will have little difficulty in looking both more radical and less confused than the post-defeat parliamentary Labour Party. Wiser Westminster observers will note that in demographic terms, the new SNP contingent represents exactly the kind of intake the Commons now desperately needs, ordinary active citizens pitched straight from the world of “real” jobs into the Commons chamber; and the resources they will now have available for research offer them a historic chance to deepen and sharpen their arguments, and to do a job of work not only for Scotland, but for tens of millions of non-Tories across Britain, in holding the Cameron government to account from a centre-left position.

It is a heavy responsibility; and powerful forces – from the might of the right-wing media, to the party’s own ambivalence about Westminster itself – may make failure more likely than success. For now, though – whatever benches they finally occupy in the Commons – the SNP looks by far the best-organised team in UK politics, when it comes to opposing the British government’s current direction of travel; so let battle begin, and may they succeed in raising their game, to match the scale of the challenge.