When bankers say it’s ‘time to move on’ from ‘banker bashing’, they sound, more than anything, like hit-and-run drivers eager to leave the scene of the crime. Unfortunately, moving-on is virtually impossible as long as everyone else has to live with the economic consequences of their recklessness, and for as long as the banks remain unreformed. When the bankers’ banker, Bob Diamond, calls an end to ‘remorse and apology,’ it carries an air of bewildered annoyance that anyone is still complaining, so used are they to getting their own way.
That much is clear, now that we’re in the season of bank profit announcements, inconveniently, just as cuts start biting countrywide. Last week, Barclays announced profits of £11.6bn and admitted that it paid only 1% corporation tax, compared to 28%, the current national rate. This week, the chief executive of RBS, which is 84% taxpayer owned, is set for a £2.4 million bonus.
And what is the government doing to tame the banks, tackle excessive profit making and the culture of disproportionate bonuses? So far they’ve made a great spectacle of Project Merlin, their new package of banking checks and balances. But these have been dismissed, even by the Daily Telegraph, as ‘meaningless twaddle.’ In reality the Coalition government is much less coalesced around how to tame the banks.
Not only are the real issues both cultural and structural, solving them has become soaked in conflicts of interest. The Bureau of Investigative Journalism recently revealed that City financiers provide around half of the Conservative Party’s funding. Perhaps this explains the extraordinary contortions of a government that says it will get tough on the banks, in virtually the same breath that it says it is time to stop bashing them. Also, why it has launched an Independent Commission on Banking, with a brief to come up with whatever structural reforms are necessary, and then proceeds to pre-judge its outcome by briefing that breaking-up the banks is not on the cards.
Here’s the problem. Banking – an intermediary service – became the tail that wagged the economic dog. It was meant to be a utility that serves society and all its productive activities. Yet banking became an end in itself, with a business model built on the exploitation of conflicts of interests. Our challenge, now, is to make banking both safe and useful. nef has a number of proposals to help do this. They range from changing the culture and perverse incentives for staff, to looking at how money is created and who gets the benefit, and separating risky from important but routine functions. They’re part of nef’s Great Transition campaign to take back our banks and are summarised in the report ‘Where did our money go?
But ideas without action are like recipes without ingredients. For that, we all need dynamic initiatives like UK Uncut who can bring the issues alive on the streets where people live, work and shop. A dysfunctional banking system is possibly the greatest obstacle to creating a better, sustainable economy. If UK Uncut can get bank reform talked about in the same way that they triggered pub conversations all over the country about tax avoidance, there is hope. At the very least, they are helping to ensure that nobody leaves the scene of the crime until justice has been done. I believe, that UK Uncut is the Big Society in action at its very best.