Banksters are “socially-useless” shocker!

Lord Turner is the head of the FSA (that’s the Financial Services Authority, not the Food Standards Agency).

If the Tories win the next election, he’s toast and so is the FSA which will be abolished, its powers returned to the Bank of England.

So that’s probably why he’s giving strong views on taxing banks – the kind of talk that gets frozen out of polite society in the City, I expect.

The kind of reforms Turner suggests could save the capitalists from their chaotic system – but would hurt them in the short term by imposing costs to implement the regulation of apparently speculative or dangerous activities.

Transnational corporations are lobbying against proposed EU regulations on derivatives which would require deals to go through a clearing house.

In the UK, however, there’s nothing tough planned for the transnationals. The government might be talking up food sovereignty, the transition to low-carbon manufacturing, and so on, but there’s no plan to put the casino-capitalists on a diet.

Response to Turner’s views are revealing:

The Chancellor, Alistair Darling, asks what would replace the City as a source of employment and tax revenues. So, at least he’s willing to consider alternatives if laid out before him.

The Shadow Chancellor has remained silent. For obvious reasons. No one would believe a Tory Chancellor would crack down on big business.

London’s buffoonish Mayor, Boris Johnson, is perhaps the only UK politician willing to leap to the defence of the City.

An unnamed London banker is quoted in the FT as saying “It is just illogical to want to shrink one of your most important industries,” unless it happens to have led to the destruction of all your other industries, I suppose… He goes on to say: “If you want to turn London into a Marxist society, then great.”

Yes, comrade. Great! Full marks for hyperbole.

“Saint” Vince Cable of the Lib Dems has welcomed what Turner has said, stating that that “competitiveness” arguments cannot be used to defend the status quo:

“If you are engaged in behaviour that is dangerous to the wider British economy, it is right some sectors may have to contract,”

However, Nick Clegg, the Liberal leader, has said that taxation would be unworkable as a way of shrinking the City as global agreement would be required.

It was interesting to observe President Nicholas Sarkozy of France revealing his tough plans for reform to bank remuneration – which will only be implemented if there’s a global agreement. Which in political terms, is a win-win deal. If the rest of the world says non, he wins; if the rest of the world says oui, he wins.

What changes do I suggest, then?

Well, given that the financial services sector could not exist without the taxpayer support that has been given, the government should ensure that restructuring takes place with the following modest reforms:

* Voluntary redundancies only, and terms and conditions respected for the pay and pensions of bank staff on low- to middle-incomes. Workers in the financial services industry should not be made to pay for the greed of their employers.

* Executive pay, pensions, and other benefits should be capped at all financial institutions – even those in which the government has no shareholding. If executives want to flee elsewhere, let them – there are plenty of talented people willing to take their place and be justly rewarded.

* To prevent future banking crises, the nationalised banks should be mutualised rather than be privatised. Mutual financial institutions – the credit unions, building societies, and Cooperative Bank – have served their members/customers and behaved responsibly.

Middle income workers shafted by super-rich

It used to be known as Middle England, but a few years ago it got changed to Middle Britain (Try the Middlebritainometer to see how you compare.)

Supposedly this Middle was deferential to the rich and looked down on those below. Not any more

Britain’s middle earners have lost ground to the ­better-off and the rich, seen their relative status in society decline and been let down by politicians, the Trades Union Congress argues in a report on Thursday.

Thirty years after Margaret Thatcher first targeted voters in middle England, and 12 years since New Labour made its winning appeal to “middle Britain”, the TUC draws a sharp contrast between the fortunes of that group and those of people on comfortable professional incomes. However, this richer group has increasingly been seen, by commentators and politicians alike, as “middle Britain”

The result is that successive governments have failed to deliver what true middle-earners want – a dissonance that helps to explain outrage about the MPs’ expenses scandal, says the TUC.

The findings may make alarming reading for Labour. The high command is aware it cannot win the next general election without the support of this group of voters – normally termed C1s and C2s by psephologists.

The TUC defines “middle income Britain” as the fifth of the population straddling median income, the level that divides the population in two. Median household income was £377 a week, just under £20,000 a year, in 2007.

Median earners have seen their income rise by less than the average, or mean, income over the past 30 years, the TUC says. The mean is calculated by dividing total incomes by the number of people in the UK.

Since 1979 the income of median earners has risen by 60 per cent, while much bigger increases for the better-off have pushed up mean earnings by 78 per cent, according to the report.

While median income fell behind more sharply under the Conservatives as society became more unequal, the TUC says the gap has grown under Labour. Mean net household income in 2007 stood at £463 a week, 23 per cent higher than the median.

“Middle income Britons” who have jobs are concentrated in white-collar and skilled manual roles, including dispatch clerks, retail managers, information technology workers and teaching assistants.

Their experience of life is likely to be marked by econ­omic insecurity – rather like members of the struggling middle class in the US who have been dubbed “the anxious middle” by economists.

Compared with those just above them on the income scale, median earners are less likely to have had a university education, to enjoy a final salary pension scheme, to hold shares or to have significant savings. They are more likely to have experienced unemployment.

They are frustrated, says a YouGov survey for the report. While they have aspirations for more fulfilling work and better living standards, they feel keenly their inability to fulfil society’s rising expectations. Four in 10 people on median incomes believe their job has a lower status than their father’s.

Stewart Lansley, the report’s author, said one of the big failings of the past 30 years was that the middle income Britain of the 1970s and 1980s had not been transformed into the well-to-do middle Britain of politicians’ recent imagination.

“Maybe because of this, middle income Britain holds noticeably different values than those above them in the income hierarchy. They are more pro-state and strongly support government action to tackle in­equality,” he said.

Millionaire Mandelson picks Tory banker to oversee Royal Mail sell-off

Solomon Hughes reports in the Morning Star:

PETER Mandelson has picked a new post boss. His choice of Donald Brydon as new chairman of Royal Mail shows that, when in doubt, Labour reaches for a banker.

Brydon will get £200,000 a year for his two days a week at Royal Mail. This might seem like a lot to you or me, but he has become used to big money from his long banking career.

Brydon started off with a 14-year stint at Barclays, followed by a job as chief executive of Axa Investment. He still sits on Axa’s board, although he stepped down as CEO in 2002.

He has always been an outspoken banker, but unfortunately spent a lot of time getting it wrong in a loud voice.

In 2003, leading investor Warren Buffet was predicting that complex financial derivatives were “financial weapons of mass destruction.” Buffet is not a radical – he is one of the world’s richest men, equally happy helping Arnold Schwarzenegger or Barack Obama.

But when Brydon heard Buffet’s warnings, he felt the urge to speak out. He seems to have been particularly worried that criticism of the financial system had come from within, from a businessman like Buffet.

Brydon chose to respond at a joint conference of British and US bankers. “We all need to be on guard lest regulations stifle initiatives in the retail application of derivatives,” he warned.

With his help, the meeting turned out to be something of an anti-Buffet rally, with other speakers denouncing Buffet as “frustrated.” As it turned out, Buffet was right and Brydon was wrong.

Brydon also felt the need to stand with then US Federal Reserve chairman Alan Greenspan against the critics of derivatives.

In 2003, Brydon claimed that, “as investor confidence has been rocked so the importance of risk mitigation instruments such as derivatives has increased.”

But derivatives actually added to the instability of the system – had they been properly regulated in 2003, we might not be in the mess we are in now.

Brydon’s worries that derivatives might be reined in stemmed from his general broad dislike of regulation.

He was also head of the Financial Services Authority “practitioner panel,” a group of bankers brought in to advise Britain’s financial regulator.

Unfortunately, their voices were heard all too well. The FSA remained deferential to the bankers and failed to stop the financial recklessness that caused the current crisis.

Brydon used his place on the panel as a pulpit from which to attack the “regulatory burden” and argue for the “need to remain vigilant that, in developing regulation, a point of no return is avoided where innovation, flexibility and competition are threatened.”

His own firm Axa showed why tighter regulation should have been imposed. In 2003, Axa Investment boss Brydon argued for less FSA regulation. In 2004, the FSA hit sister firm Axa Sun Life with a record £500,000 fine for misleading customers.

Mandelson described Brydon as “a proven business leader and successful chairman.”

Brydon’s experience certainly extends beyond banking. Unfortunately, he seems to have brought a banker’s mind to his industrial jobs.

He became chairman of high-tech medical firm Amersham and sold the company to US giant GE. He then became chairman of engineering firm Smiths Industries and promptly sold off its aerospace arm, again to GE.

The Independent was driven to say: “The former fund manager seems to be developing something of a knack for selling British publicly quoted assets at supercharged prices to overseas concerns.”

Subpostmasters and posties will not be reassured by a new boss who loves to flog things off.

Like many new Labour appointments, Brydon is also a longstanding Tory. As a student, he was president of the Edinburgh University Conservatives, befriending fellow Tories such as Malcolm Rifkind.

In 2001, he signed a letter to the press describing Ken Clarke as “the best hope to lead the Conservative Party back to government and create the social and economic climate necessary for business to flourish.”

Obviously this is handy, because Ken Clarke is likely to be his boss after the next election.

Unless of course the plans to sell-off our postal service, and other unpopular ideas, are dumped along with slimeballs like Mandelson.

What more evidence do you need? Does this sound like a Labour man to you… the man is a millionaire who helps out his fellow millionaires – to hell with the rest of us. Get this:

The Business Secretary has refused to reveal detailed information about his financial affairs despite the possibility that they could directly influence his ministerial decisions.

Instead, he has declared only that his “financial interests have been transferred into a blind trust”. The contents of the blind trust – which may include shares, properties and other investments – remain secret.

The existence of Lord Mandelson’s blind trust came after the Cabinet Office released a list of minister’s financial interests. The interests are those declared by ministers to Whitehall officials.

It is the first time that the list has been released and only interests “which are, or could reasonably be perceived to be, directly relevant to Ministers’ public duties” have been publicly disclosed.

The Business Secretary is one of five Government ministers to have set up blind trusts. The others are Ben Bradshaw, a health minister; Lord Myners, the City minister; Lord Davies, the trade minister; and Lord Darzi, a health minister.

A further nine ministers, including five members of the Cabinet, also disclosed that their spouses or close relatives are “consultants”. Few details about who they work for are revealed, raising questions about potential conflicts of interests.

Blind trusts have traditionally been set up to allow ministers to put their financial interests at arm’s length. Trustees are appointed to manage the trust and ministers are not supposed to have any role in deciding whether and when investments are bought and sold.

However, the arrangements have been criticised in the past. Tony Blair set up a blind trust after becoming Prime Minister. However, it later emerged that Mr Blair’s wife, Cherie, had directed the trustees to use the trust to buy two flats in Bristol.

Lord Sainsbury, the former science minister, also set up a trust to hold his multi-billion pound stake in Sainsbury’s supermarkets. The shares were not sold while he was a minister.

Officials have conceded that ministers will be aware of the investments held in the trust and that such an arrangement may present a “conflict of interest”.

Last night, it emerged that Gordon Brown revised the ministerial code to remove specific guidance to ministers on blind trusts. The official code of conduct previously warned that ministers with trusts may have to step aside from decisions related to their financial affairs.

The previous code stated: “It should also be remembered that even with a trust the minister could be assumed to know the contents of the portfolio for at least a period after its creation, so the protection a trust offers against a conflict of interest is not complete…In some cases, it may not be possible to devise such a mechanism to avoid actual or perceived conflict of interest.”

All references to blind trusts have been removed from the revised code of conduct drawn up by Mr Brown after becoming Prime Minister.

Westminster insiders have expressed surprise that the Business Secretary, a career politician, is wealthy enough to justify establishing a trust.

Accountants believe that Lord Mandelson must have assets worth at least £500,000 and probably more than £1 million to make it worthwhile setting up a complicated trust. Annual fees must be paid to accountants and lawyers running the trusts.

Mike Warburton, an accountant who runs trusts at Grant Thornton, said: “I suspect the trust is going to be in excess of £1 million or why bother. The concept of a blind trust has always struck me as a bit dubious as you are only going to appoint a trustee who is someone you know pretty well and trust.”

Liam Byrne backs coops… or sneaky privatisation?

Read the following and consider two questions:

1. Do we need to expand cooperative ownership into the private sector or the public sector?

2. If Mandelson is involved in a social enterprise summit, and Byrne is talking about a role for social enterprise in “accelerating public service reform” (privatisation), can we assume that the government could be looking to rebrand unpopular policies (the Royal Mail sell-off, for example) using the pretense of cooperative values?

Social thinking can pull UK out of recession
March 11 2009
The Minister for the Cabinet Office, Liam Byrne, said that social enterprise had a key role to play in helping the country out of recession.

“There will be a debate about the type of economy, society and country that will emerge from this recession,” he said. “I predict that social enterprise will become more, not less, influential because people are asking: ‘How on earth did we end up here?’

“A demand for answers will follow,” he told delegates at Birmingham’s International Convention Centre. “One answer will be that markets will need more morals like yours. We need business for the public benefit not the personal bonus. This country will look more for ethos with its enterprise – not just cut and thrust but care and trust.”

Mr Byrne said that social enterprise was an integral part of the Government’s New Opportunities white paper, which outlined how new jobs could be secured for Britain in the decades ahead.

He added that the Business Secretary Lord Mandelson would soon be chairing a social enterprise summit to ensure that that the sector plays a bigger role in the new British economy.

“If we want to re-balance Britain’s economy in the years to come, then the role of social enterprise has to expand. We will bring together the brightest minds and the most progressive thinkers – and even some politicians – to join us in this task.”

He said there would also be a bigger role for social enterprise in the delivery of public services: “In the last ten years we have rebuilt institutions in our communities — new schools, colleges, universities, health centres, surgeries and youth centres.

“In the next ten years we have to hand over the reins to local people, and we’ll need your help. When we publish our plans for accelerating public service reform, I will set out clearly how I want to see the role of social enterprise expand.”

In terms of new jobs, Mr Byrne said that he wanted to see 25,000 more people working in social enterprise in the months ahead.

He said that the “soft power” of social enterprise would grow when “investment in British youngsters is seen as more valuable than short-term bets on America’s sub-prime debt”.

After Royal Mail, what will be privatised next, the Royal family?

The armed forces?

Already banned from unionising, should be easy to squeeze profits out of service-personnel. No doubt money could be made in sale-and-rent-back deals…

Perhaps the police forces could get “private investment”?

God knows, with ACPO a private company already, there could be plenty of money in driving down the pay and conditions of police officers. 999 could be changed to a premium-rate number…

Paul Feldman notes:

The extra £500 billion in liabilities taxpayers are said to be facing to prop up RBS and Lloyds will take the state’s commitment to the insolvent banking system to a staggering £1.3 trillion (£1,300,000 million if it makes the total any easier to understand). That’s equivalent to the value of the British economy’s output for a whole year.

Meanwhile, on the back of a paltry – by comparison – £5,900 million deficit in the Royal Mail’s pension fund, New Labour is planning to sell off part of the company to a transnational corporation. New investment will be undertaken at the price of “modernisation” of this nominally public service, resulting in large-scale job losses and price increases. The break-up of post office services is an indication of what is to come.

That, at least, is the plan and it is entirely consistent with New Labour’s role in life. This is to use the capitalist state to create opportunities for global companies operating in Britain to extract maximum profits from working people. With the capitalist economy in freefall, new opportunities for profit-taking are most welcome by business and part-privatisation does just that.

Well, who honestly believes that the private investor will be willing to bail out the pension fund as the government was trying to claim?

The investor will not be acting as a charity – it’ll be after the loot. And that will come from cuts in services, job losses, and increased costs to consumers. Whatever happens, the pension fund will be rescued by taxpayers.

Neil Clark, writing in the Morning Star, has been looking into the details of the possible sale:

The three leading contenders for a 49.9 per cent stake in the Royal Mail are Dutch postal operator TNT, Deutsche Post subsidiary DHL and private equity firm CVC Capital Partners. The Sunday Express informs us that “TNT and CVC are serious in their intentions.”

In fact, CVC is very serious in its intentions – it has been lobbying the government to sell off a stake in Royal Mail since 2005.

Founded in 1981, CVC describes itself as a “global private equity and investment advisory firm headquartered in Luxembourg with a network of 19 offices across Europe, Asia and the USA.”

To see how a CVC-owned Royal Mail might operate, we need only look at the way the company ran another British institution it acquired, along with another private equity firm Permira – the Automobile Association.

Since its transformation from a mutual organisation to one owned by private equity sharks, the whole ethos of this once much-loved British institution has changed.
Over 3,000 staff have been laid off. The organisation consequently slumped from first to third place for response times.

In 2006, the AA chief executive conceded on an audio tape leaked to a national newspaper that the slimmed-down workforce was struggling to get to stranded motorists.

The prospective sell-off of the Royal Mail is already providing lucrative business for some.

TNT is being advised by the international law firm Allen & Overy, while CVC is working with Clifford Chance, the largest legal firm in the world. TNT has reportedly been sounding out investment bankers to advise it, including new Labour’s favourite money men at Goldman Sachs.

And what do the British public think of the planned sell-off? Not a lot. According to a new poll, around 75 per cent of Britons who had heard of the possibility of Royal Mail being sold opposed the idea.

Felix Jakens reports on the Westminster rally of the campaign to Keep the Post Public:

The rally was opened by CWU General Secretary Billy Hayes, who evoked the clear battle lines that this issue represents: between people’s democracy and the political elite. He went on to point out the glaring hypocrisy of the Labour government which, in its 2005 manifesto, pledged to keep the post office fully in public hands. Hayes called upon the members of the CWU to come together to make sure that the politicians behind the scheme know exactly how much power the unions hold and that they will not be ignored.

To the joy of the massed crowd, Hayes handed over the floor to Tony Benn, who was declared an honorary member of the CWU. Benn, the former Postmaster General and long time champion of postal workers rights, was on typically spirited form. He eloquently argued the position that, as a public service, the Royal Mail must be for the benefit of the people who use it, not for the benefit of shareholders. He also pored scorn on the government’s assertion that the planned partial sell-off is not about privatisation at all but about modernisation. “The markets are failing” he stated. “Why would we ever place our most treasured public service in their destructive hands?”

This sentiment was largely echoed by the subsequent speakers. Other union General Secretaries on hand to offer full support and solidarity included Tony Woodley of UNITE, Mick Shaw of the FBU, Brendan Barber from the TUC, Bob Crow of RMT, Paul Kenny of the GMB, Dave Prentis of UNISON, Mark Serwotka of PSCU and Dereck Simpson from UNITE. Every one of these individuals pledged the full and unswerving support of their unions and vowed not to bow to governmental pressure in the fight against reckless privatisation.

Other notable contributions were made from Geraldine Smith MP, who tabled EDM 428 in the first place, and who drew attention to the shockingly underhand tactics that government has reverted to, in ‘leaking’ a document stating that only through privatisation will postal workers’ pensions be protected. She argued that these bullying, blackmailing methods reveal the true face of Peter Mandelson and New Labour in their most shameful reality. There were also good turns from Frank Dobson M.P, Lord Tony Clarke and Dot Gibson of the National Pensioners Convention, each of whom re-iterated the importance and historical poignancy of this issue, as well as the scandalous truth that the plan is being issued by a Labour government.

Neal Lawson, chair of Compass, was also a speaker. Neal started by making it clear that he believes a key factor in the government’s plans is the desire to crush the industrial and political strength of the CWU, but he also called for the need to work together to present a realistic alternative to privatisation. To draw together expertise to present a future for the Royal Mail that is viable and sustainable. He further used his time at the podium to draw reference to the wider significance of this issue. The need to seize the moment and engage with the shift in national thinking and ideology, away from marketisation, towards a fairer freer society. To avert the ever steady march of privatisation in favour of public services and create the type of society we want to see, a fairer more equal society, where the benefits are for the many and not the few.

There was an overwhelmingly optimistic, spirit amongst everyone present that the CWU, in concert with public and union support could halt and reverse the government’s plans to strip this country of one of its finest assets. The message was clear; the privatisation of our other national industries and services has failed. Failed to improve customers’ service and failed, to improve workers pay or conditions. In this time of economic crisis and uncertainty, the concept of selling off one of this country’s most prized assets, for the benefit of no one but a few select shareholders, is insane. Keep the post in our hands. Keep the post public.

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