Diamond’s lack of contrition could be fatal

Declining to offer an apology or take responsibility for the scandal at Barclays will not play well with politicians.

David Cameron has said that accountability for the rate-fixing at Barclays has to go “to the very top”. George Osborne called what happened "completely unacceptable" and "symptomatic of a financial system that elevated greed above all". Vince Cable said that Diamond could be prevented from running a company in the future, saying that “There are last resort powers of director disqualification – that is certainly a sanction open to us.” Ed Miliband has called for a criminal investigation.

However, despite the political pressure piling up on him and his company, Barclays chief Bob Diamond has yet to offer any sort of apology. In a letter to Andrew Tyrie, the chair of the Treasury Select Committee, he says:

Barclays traders attempted to influence the bank’s submissions in order to try to benefit their own desks’ trading position. This is, of course, wholly inappropriate behaviour… This inappropriate conduct was limited to a small number of people relative to the size of Barclays trading operations, and the authorities found no evidence that anyone more senior than the immediate desk supervisors was aware of the requests by traders, at the time that they were made. Nonetheless, it is clear that the control systems in place at the time were not strong enough and should have been much better.

Later in the letter (read it in full here) he addresses the accusations of Libor rate-setting, and admits:

Even taking account of the abnormal market conditions at the height of the financial crisis, and that the motivation was to protect the bank, not to influence the ultimate rate, I accept that the decision to lower submissions was wrong.

Neither of these “admissions” comes anywhere near to being an apology, either for the actions of the bank he leads, or for the impact it has had on small business and households. The wording also subtly denies any direct responsibility for Diamond – a “wrong” decision was clearly made, but he doesn’t offer any ideas as to who made it. Stating that the “inappropriate conduct” was limited to a small group of traders also reinforces this position – it strongly recalls the “rogue reporter” claims we’re so familiar with from the phone-hacking scandal, and comes across as an attempt to prevent the blame reaching Diamond and others in the upper echelons of the company.

Diamond will appear before the Treasury Select Committee in the near future, and no doubt Tyrie and his colleagues will take him severely to task over the detail of precisely what happened and who knew what when. But for today, with senior politicians condemning him and pledging to ensure complete accountability, declining even to offer a simple apology for what was clearly a catastrophic series of errors, has just made things a whole lot worse for Bob Diamond.

 

Bob Diamond addressing the CBI conference in 2010. Photograph: Getty Images

Caroline Crampton is web editor of the New Statesman.

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England is now a more expensive place to study than the US. Why?

Is a university education in this country really worth £44,000, and how does our system compare to higher education funding elsewhere?

England has long sneered at American universities and their exorbitant fees. It cannot do so any longer: England is now a more expensive country to study than the US, and is easily the most expensive of eight Anglophone countries – the four UK nations, Australia, Canada, New Zealand and the US – analysed in a new Sutton Trust report. English students graduating from last year left university with an average of £44,000 in debt £15,000 more than Americans studying at for-profit universities across the pond.

Why do English students have it so much worse than other students in the UK? There are two answers. The first is the government's decision in 2010 to shift much of the cost of university from the general taxpayer to the beneficiaries: the students themselves. The second answer is devolution. The devolved governments in Northern Ireland, Scotland and Wales have made political choices to differentiate themselves from Westminster by prioritising keeping fees down – even when, as in Scotland, the effect is to benefit middle-class students at the expense of disadvantaged ones. Students in Wales who study in England are eligible for generous grants, meaning they pay less than £4,000 a year rather than up to £9,000. Those studying in Northern Ireland have their fees capped at £3,925. 

Even England's £9,000 fees are puny set against those at elite American universities. In 2016/17 annual, tuition fees at Harvard are $59,550 and, when all else is accounted for, Harvard reckon each year costs students $88,600. But such exorbitant numbers are not the real story. About 60% of Harvard students receive the Harvard Scholarship: a microcosm of how US students benefit from a culture of graduates giving endowents to their old universities that is still lacking in England. Scholarships and bursaries at universities in the US are far more generous than in other countries. And those who go to public universities within their own state pay far less: those graduating after four years leave with an average debt of only US$27,100 [£19,100]. This is why the average debt of US graduates is now considerably less than in England. But those who berate that even America now has a more benign system for students than England should not be so hasty. The majority of US loans are not income contingent, meaning that low earners who are already struggling still have to pay.

Governments throughout the world are grappling with how to fund send an increasing proportion of students to university in an era of austerity. In the last two decades at least 14 countries in the OECD, including Australia, Canada, New Zealand and the UK, have implemented major reforms to fees, according to the Sutton Trust. In general these reforms have led to students paying a greater share of the cost of their tuition. 

So in a sense what has happened in England is merely an extreme example of an international trend. And the introduction of tuition fees in 1998, which have been hiked up twice since, has been managed better than most acknowledge: indeed, the proportion of disadvantaged students at university has actually risen by one-fifth since tuition fees rose to £9,000.

But, with the poorest students in England now graduating with £50,000 in debt, more students will be driven to ask whether a university education is really worth it. For a small but significant minority, it isn’t. A recent IFS report found that male graduates from 23 low performing institutions – though it sadly declined to name them - earn less, on average, than those who do not go to university, and end up with huge debt to boot.

No matter how expensive a university education has become, not having one is even more expensive. Throughout the world demand for university education continues to soar; in England the average graduate premium is £200,000 over a lifetime. Yet too many dunce universities are saddling students with debt without giving them anything in return.    

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.