Tag Archives: david cameron

Bankers invent new way to get paid too much

26 Feb

HSBC boss Stuart Gulliver. Photo by World Economic Forum (Licence here)

HSBC boss Stuart Gulliver. Photo by World Economic Forum (Licence here)

This week HSBC announced it would in future be paying its top bankers ‘fixed pay allowances’, in order to circumvent new EU rules restricting bonuses. According to the Guardian the bank’s chief executive Stuart Gulliver will be taking home at least £4.2 million a year in future.

New EU rules restrict bonuses to 100% of a banker’s pay, unless approved by shareholders. With approval from shareholders the cap may be raised to 200% of pay.

Last week our Prime Minister spoke of his ‘moral mission’ in welfare reform. He said ‘our long-term economic plan for Britain is not just about doing what we can afford, it is also about doing what is right’. If the moral mission does not include tempering the excesses of the banking sector, is the mission at all legitimate.

The highest paid employee at HSBC in 2013 earned £7.06 million through salary, bonuses and other payments. It would have taken me in my last job nearly nine hundred and fifty years to earn this figure without overtime. If the government allows this to happen is that doing what is right? Is this level of decadence even slightly defensible when the government’s 2008 banking bail out ran into the hundreds of billions of pounds?

According to the National Audit Office the banking sector at one point owed the government £1.162 trillion in various loans, schemes and shares. Much of this has now been paid off, but the cost in terms of businesses destroyed, jobs lost and lives damaged thanks to their irresponsible actions is immeasurable. Given this legacy wouldn’t the socially responsible thing to do be to make more jobs and help more businesses?

According to Reuters, HSBC chief executive Stuart Gulliver has slashed 40,000 jobs globally in the last three years. He has also ‘sold or closed 60 businesses’. As a result the bank saw a rise in pre-tax profit of 9% to £13.6 billion. It seems that £3.9 billion of this has gone into the so called ‘bonus pool’. Between this excess and a handful of Londoners claiming £80,000 in housing benefit the Prime Minister has made clear which he believes requires the more urgent reform.

Perhaps it’s time someone at the Treasury sat down with a calculator and worked out how many small businesses or secure jobs could be made for £7.06 million. Alternatively Chancellor George Osborne may want to take a look at Royal Bank of Scotland, the bank in which our government holds an 81% share.  A number of news agencies are reporting that a Treasury agency is permitting the nationalised bank to spend £550 million on staff bonuses for 2013. Perhaps this is a reward for a successful year? RBS has not yet disclosed its profits, but Reuters and Sky report an estimated loss of around £8 billion.

Inside sources also tell Reuters RBS could cut up to 30,000 of its workers in coming years. How many of these job losses come from low level staff and how many come from those in line for millions in bonuses?

What is the government doing to deal with these excessive bonuses? Well, the Prime Minister has made clear that, at RBS at least, bonuses will not inflate further from their current ridiculousness.

The government will also be taking its opposition to the EU bonus cap to the European Court of Justice. If you’re wondering whether you read that right – yes, our government is legally challenging a rule that restricts bankers from taking home more in bonuses than their normal salary. It seems our government is worried the rule will simply lead to higher normal salaries to make up for smaller bonuses.

Apparently it has occurred to no one that bankers should just accept a more reasonable wage packet.

Our banking sector has cost us infinitely more economically and socially than any problems with the welfare system. Unfortunately our government seems more interested in making things harder for struggling households than holding the super-rich to account.


The Prime Minister’s moral mission to attack welfare

20 Feb

Photo by The Prime Minister's Office, via Flickr

Photo by The Prime Minister’s Office, via Flickr

Poor old David Cameron; there are so many people upset with him and he just can’t understand why. Our Prime Minister is on a ‘moral mission’ to clean up the benefits system, you see. Apparently the government’s attack on the welfare bill isn’t just about saving money – it’s about helping people.

It seems this is the message we’re supposed to buy into going into the next election. In an article for the Telegraph the Prime Minister highlighted the problems he has been heroically trying to solve in the welfare system. Housing benefit bills as high as £80,000 a year for a single claiment. Hundreds of thousands on incapacity benefit in need of reassessment. Mr Cameron also stands by his government’s decision to cap benefit rises, although he frames this as ensuring benefits don’t increase faster than wages.

These are all very simple ideas to grasp and many of them may seem reasonable. But they mask a very overt attack on the welfare system.

The claim that under labour some people in London were claiming as much as £80,000 a year in housing benefit is intriguing.  This predictably misses the point of the housing benefit problem. As Independent columnist Owen Jones frequently points out housing benefit has for years acted as a tacit subsidy for extortionate land lords. In areas like London monthly rents can be hiked hundreds of pounds at a time.

 Average rents are set to exceed £1,000 per month for the millions of UK renters in 2014. Placing responsibility for the housing benefit bill on tenants is counterproductive and, given the number of MPs who are also landlords, frankly insulting. When Cameron chooses to spotlight housing benefit claimants instead of pursuing a serious house building programme he is letting us know who his government really cares about.

The government’s solution to incapacity benefit reassessment was to expand the role of ATOS in the assessment process. In case you’ve forgotten about ATOS, it’s the company that has this on its record. In 2012 former ATOS nurse Joyce Drummond apologised for her part in the assessments. Ms Drummond even told the Daily Record ‘ATOS went by the philosophy that if you had a finger and could push a button, then you could work’. Thousands of disabled people have been wrongly judged fit for work.

If this is how the Prime Minister’s moral mission is carried out I’m not sure I want anything to do with it.

I’m also sure to David Cameron it sounds entirely reasonable to guarantee those looking for work are not taking home as much as those in work. But as a millionaire the Prime Minister has never had to face the practical consequences of his policy or the reality of poverty. Inflation has only just dropped below 2%. The rise in the  Consumer Price Index has fallen below 2% for the first time since the government were elected. Neither wages nor jobseekers allowance have matched the rise in the cost of food, rent or other living expenses under this government. When benefits are held below inflation that means people must make a very real decision to stop buying healthy food or skip a meal. This is an experience that no one in government can ever really understand.

In case you were wondering, this is why I’m not on board with the Prime Minister’s moral mission. We shouldn’t buy in to the government spin on strivers and shirkers. This narrative of the deserving and undeserving poor is Victorian. It has no place in the new millennium.

Tim Ballantine's Blog

A desperate attempt to understand the world, using only misconceptions and non-sequiturs

Completely Unravelled

The messiness of life

%d bloggers like this: