Boris Johnson has hugged Barclays too close

The Mayor of London's links with the bank risk damaging reputations in London.

The news today that Barclays have been hit with huge fines for their involvement in the interest rate fixing scandal will have caused great anxiety at City Hall.

While no senior politician can claim to have kept the bank at arms length, there is no politician who has hugged them closer than Boris Johnson. In fact, even before he was first elected Mayor of London, Boris was determined to bring Barclays and boss Bob Diamond into his court.

Asked in April 2008 why he hadn’t named any of his advisers yet, Boris quickly revealed that Diamond was top of his list. Speaking to LBC radio, Johnson said he was “delighted” that Bob would head his new mayoral charity explaining that Diamond was “an extremely wealthy man, and I know how much money they make at Barclays because they rip me off with their charges the whole time."

Diamond and other City big-wigs were singed up to an elite “London Business Club” where the mayor extracted large donations over plates of poached eggs and smoked salmon.

According to one report: “The newly refurbished Savoy played host to the likes of ITIS and Streetcar chairman Sir Trevor Chinn, Goldman Sachs head of economics Jim O’Neill and former chief economist and deputy chairman of Man Group Stanley Fink. They were rubbing shoulders along the breakfast table with incoming Barclays chief executive Bob Diamond, who flipped open his chequebook to deliver a £50,000 donation over the meal.” Boris would later welcome a further £1m in charitable donations from the bank.

Such generosity comes at a price and Boris has since taken to the Telegraph to dismiss attacks on the banking industry as “neosocialist claptrap” and told Londoners to stop “whingeing” about house prices pushed up by city bonuses.

He claimed that a tax on banker bonuses would force thousands to flee the country and campaigned relentlessly for the Conservative government to cut the top rate of tax. While every other politician in Britain was desperate to distance themselves from the bankers, Boris - under the advice of his policy chief Anthony Browne - just hugged them closer. Browne has since gone on to become the head of the British Bankers Association.

When Boris announced that he was launching a central London bike hire scheme it was only natural that Diamond’s bank would be approached.

Boris failed to finance the bikes through advertising like other European schemes. In fact despite promising the bikes “at no cost to the taxpayer” (pdf), Boris’s Barclays Bikes have since cost taxpayers £120m with only “up to” £50m set to come back from the bank. Later one City Hall source told the Standard that the Barclays deal amounted to “payback” for Boris’s support during the financial crisis.

Full details of this payback have never been fully revealed, with City Hall claiming commercial confidentiality on the deal. However a London Assembly investigation into the agreement warned that Boris had risked damaging TfL’s own brand if Barclays later “suffered major reputational damage”.

With calls today for a criminal investigation into the bank, that fear has now been dramatically realised. And in typical style Boris was quick today to insist that “the whole banking industry” should come clean over the scandal.

Whether or not this will be enough to stem criticism of his own relationship with the bank remains to be seen. But with his mayoralty so visibly tied to Barclays and its senior management, Boris will now hope that other banks absorb some of that reputational damage fast.

 

Boris Johnson poses during the launch of the London Cycle Hire bicycle scheme in 2010. Photograph: Getty Images

Adam Bienkov is a blogger and journalist covering London politics and the Mayoralty. He blogs mostly at AdamBienkov.com

Photo: Getty
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The three avoidable mistakes that Theresa May has made in the Brexit negotiations

She ignored the official Leave campaign, and many Remainers, in pursuing Brexit in the way she has.

We shouldn’t have triggered Article 50 at all before agreeing an exit deal

When John Kerr, the British diplomat who drafted Article 50 wrote it, he believed it would only be used by “a dictatorial regime” that, having had its right to vote on EU decisions suspended “would then, in high dudgeon, want to storm out”.

The process was designed to maximise the leverage of the remaining members of the bloc and disadvantage the departing state. At one stage, it was envisaged that any country not ratifying the Lisbon Treaty would be expelled under the process – Article 50 is not intended to get “the best Brexit deal” or anything like it.

Contrary to Theresa May’s expectation that she would be able to talk to individual member states, Article 50 is designed to ensure that agreement is reached “de vous, chez vous, mais sans vous” – “about you, in your own home, but without you”, as I wrote before the referendum result.

There is absolutely no reason for a departing nation to use Article 50 before agreement has largely been reached. A full member of the European Union obviously has more leverage than one that is two years away from falling out without a deal. There is no reason to trigger Article 50 until you’re good and ready, and the United Kingdom’s negotiating team is clearly very far from either being “good” or “ready”.

As Dominic Cummings, formerly of Vote Leave, said during the campaign: “No one in their right mind would begin a legally defined two-year maximum period to conduct negotiations before they actually knew, roughly speaking, what the process was going to yield…that would be like putting a gun in your mouth and pulling the trigger.”

If we were going to trigger Article 50, we shouldn’t have triggered it when we did

As I wrote before Theresa May triggered Article 50 in March, 2017 is very probably the worst year you could pick to start leaving the European Union. Elections across member states meant the bloc was in a state of flux, and those elections were always going to eat into the time. 

May has got lucky in that the French elections didn’t result in a tricky “co-habitation” between a president of one party and a legislature dominated by another, as Emmanuel Macron won the presidency and a majority for his new party, République en Marche.

It also looks likely that Angela Merkel will clearly win the German elections, meaning that there won’t be a prolonged absence of the German government after the vote in September.

But if the British government was determined to put the gun in its own mouth and pull the trigger, it should have waited until after the German elections to do so.

The government should have made a unilateral offer on the rights of EU citizens living in the United Kingdom right away

The rights of the three million people from the European Union in the United Kingdom were a political sweet spot for Britain. We don’t have the ability to enforce a cut-off date until we leave the European Union, it wouldn’t be right to uproot three million people who have made their lives here, there is no political will to do so – more than 80 per cent of the public and a majority of MPs of all parties want to guarantee the rights of EU citizens – and as a result there is no plausible leverage to be had by suggesting we wouldn’t protect their rights.

If May had, the day she became PM, made a unilateral guarantee and brought forward legislation guaranteeing these rights, it would have bought Britain considerable goodwill – as opposed to the exercise of fictional leverage.

Although Britain’s refusal to accept the EU’s proposal on mutually shared rights has worried many EU citizens, the reality is that, because British public opinion – and the mood among MPs – is so sharply in favour of their right to remain, no one buys that the government won’t do it. So it doesn’t buy any leverage – while an early guarantee in July of last year would have bought Britain credit.

But at least the government hasn’t behaved foolishly about money

Despite the pressure on wages caused by the fall in the value of the pound and the slowdown in growth, the United Kingdom is still a large and growing economy that is perfectly well-placed to buy the access it needs to the single market, provided that it doesn’t throw its toys out of the pram over paying for its pre-agreed liabilities, and continuing to pay for the parts of EU membership Britain wants to retain, such as cross-border policing activity and research.

So there’s that at least.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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