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.

Tory councils cut services as demand surges

More and more working people are having to use more and more public services as the capitalist economy crumbles. Unemployment is in the millions, underemployment too.

Unlike the bankers and big businessmen, we can’t afford to hire financial advisers and accountants to help us deal with our problems, and if we lose the roof over our heads, we’re out on the street or a friend’s sofa – we can’t swan off to our second, third, or fourth home…

We need advice on housing and benefits, provided by local councils.

Unlike the bankers and big businessmen, we don’t have yachts or our own island to retreat to when we want to relax.

We might take a walk in the park, lend some books from the library, or visit the leisure centre to use the gym or have a swim in the pool – all provided by local councils.

Across England, Tory councils are preparing to slash spending, just when working people need help the most. Instead of boosting employment, Tory councils are ready to add to the dole queues. (But this won’t mean cuts in taxes – in fact, they’ll have to go up to help bailout bankers!)

Rather than expell these wreckers for the chaos they are planning, the Tory leadership in parliament is watching these councils and using their examples to draw up spending cuts top implement if they form the next government.

Yesterday the shadow chancellor, George Osbourne, claimed the Tories were a “progressive” party. Lord Mandelson responded by claiming this was laughable. Truly, this was two bald men fighting over a comb…

Banksters Paradise – govt allows bonus culture to continue at our expense

Let’s now consider decency. Or rather, the lack of it.

UKFI, which owns 70% of RBS on our behalf, has approved an obscene pay package for the bank’s boss.

Truly, Fred the Shred will be proud of his replacement.

Stephen Hester will be paid almost ten million pounds for his work – which will include sacking thousands of bank workers whose taxes are invested in RBS.

The govt could have acted to limit bankers’ greed, just listen to what the other shareholders think of this:

Roger Lawson of the RBS Shareholders Action Group said: “It is absolutely outrageous that the government does not use its power to bring the remuneration of bankers in these companies down to a reasonable level.

“Do they need to pay him this much to make him work harder?”

Mr Lawson warned that basing a bonus on share price would “just encourage risky behaviour.”

So, who runs UKFI then?

Richard Murphy lists the people that Chancellor Darling picked to manage our investments:

Glen Moreno – Acting Chairman – ex Citigroup and Liechtenstein banker
John Kingman – Chief Executive – civil servant ex private sector, formerly in charge of financial stability in the banking sector for the Treasury (which he clearly did not get right)
Peter Gibbs – ex Merril Lynch
Michael Kirkwood – ex Citigroup
Lucinda Riches – ex UBS
Philip Remnant – ex Credit Suisse
Louise Tulett – career civil servant

All the bankers are from organisations that failed.

And Darling expects to effect change?

Not a hope – not with this lot.

They’ll do all they can to promote banking – and that’s just not good enough when the real economy needs less banking and more real jobs.

That a Labour government – a Labour government! – is allowing the banks to keep their gravy train going at the taxpayers’ expense should give trade unionists pause for thought. Especially since the banks are cutting thousands of jobs and turfing people out of their homes.

Even the Tories had to criticise the obscene pay-out to Hester.

This will be a major embarrassment for New Labour. It will not be allowed to stand.

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.

Flashback: Cameron ready for “unpopular” rule

Lest you think David Cameron has become a radical constitutional reformer, what with his talk of fixed-term parliaments – only maybe, he’ll think about it – recall his speech at last year’s Tory conference:

Preparing the party for a hard grind in government, he insisted he had “the grit and determination to impose discipline on government spending, keep our nerve and say ‘No’ – even in the teeth of hostility and protest”.

Mr Cameron’s speech, largely stripped of jokes and partisan attacks on Mr Brown, was designed to reflect the mood of the times. Unlike his “walk-about” speech at last year’s conference, he spoke at a podium with notes.

The connecting strand of Mr Cameron’s vision was the building of a “responsible” society, although at times the speech was disjointed and was clearly the result of a rapid rewriting exercise to take account of the fast-changing financial environment.

[Emphasis added.]

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.”

John Lewis Partnership – socialism in action

As capitalist-owned enterprises lay off workers and cut wages, the worker-owned store John Lewis – consistently voted one of the best for customer service by consumers – pays out a 13% bonus to staff. Why? Because they own the business – they won’t be asking themselves to take a pay cut!

I’m not saying that John Lewis is some kind of paradise in a sea of exploitation – it isn’t, but clearly, workers owning the enterprises in which they work is no impediment to building successful businesses (sales are up!) and responding to consumer demand (Waitrose are brining out a budget range, for example) whilst at the same time “sharing the proceeds of growth”, to coin a phrase.*

From Wednesday’s Guardian:

The annual bonus paid to John Lewis’s 70,000 staff has shrunk by almost a third after profits at the partnership were hit by the recession.

But staff still cheered the news that they will receive a bonus of nearly seven weeks’ pay, down from 10 weeks’ pay a year ago.

Because John Lewis is owned by its staff, every one of them – from the boardroom to the shop floor – receives the same percentage payout. This year it is equal to 13% of basic salary for staff at the Waitrose supermarket chain and John Lewis department stores.

At the John Lewis store on Oxford Street this morning, more than 1,000 shop staff hung over the balconies to learn what their annual bonus would be.

In the well of the atrium, Noel Saunders, managing director of the store, worked the crowd like a game show host, hinting the highest partners could expect was a 12% payout.

At 9.28am, as partners counted down from 10, his assistant Paul Thomas – who has worked in the floor coverings department for 20 years and was selected for scoring excellent results from mystery shoppers – fumbled with the envelope before pulling out a giant card bearing the figure 13%.

As customers peered through the doors, partners erupted, celebrating the bonus payment after a tough year on the shop floor.

The total bonus payout for 2008 is £125.5m, down from £180m for 2007.

“The key difference is this is a genuine bonus based on profit-sharing,” said Andy Street, managing director of John Lewis. “The word ‘bonus’ has become discredited in the economy, but for us it is something to celebrate. Our partners have worked harder than ever to achieve these results.”

The feel-good atmosphere pervaded all six floors with no grumbles from partners that the bonus fell short of last year’s bumper payout.

“Last year, 20% was a fantastic result, but in the current climate we are really happy to get a bonus as we see people around us losing their jobs,” said Charlotte Deane, who will use her bonus to catch up with her sister, who is travelling in California. “However much it is, it is a bonus, not a benefit, and I feel lucky to get it.”

Most staff canvassed expect to use the extra cash on a holiday. Indira Vakeria said she was planning a trip to India to visit her parents. “We are really pleased with 13%,” she said.

The company reported that its profits fell by 26% in 2008 to £279.6m. Chairman Charlie Mayfield warned that 2009 would be “another very difficult trading year”.

“Trading conditions worsened markedly during the year as the problems in the financial sector reduced consumer confidence to a low level,” he said.

The partnership conceded it would no longer be able to hit its target of opening 10 stores in 10 years. It has already opened four, including branches in Liverpool and Cambridge, but beyond its new Cardiff store this autumn, and a shop at the Olympic site in Stratford slated for 2011, it said its aggressive growth plan would be “delayed”.

The company said it remained optimistic that two stores across the Irish Sea, one in Lisburn in Northern Ireland and one in Dublin, would open as planned but warned that other projects, including stores in Crawley and Portsmouth, might be held up. Retail schemes around the country are being mothballed as property developers grapple with funding shortfalls and collapsing asset values. Mayfield said the retailer was “working actively with developers to maintain our rate of growth” and remained committed to the expansion plan.

It is just over a year since John Lewis first admitted that its sales were being hit by the high street downturn. By the autumn, when the UK economy was contracting, the company was reporting double-digit falls in weekly sales.

* Please, don’t misunderstand me, I doubt that the Tories – expected to win the next UK election – will fulfill their promise of “sharing the proceeds” by forcing Tesco to become a cooperative. This is something the unions need to take up with New Labour, though…

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