Don't blame Barclays alone

This is not a Barclays scandal, it's a banking scandal.

It’s always been easy to be angry with Barclays Bank. My campaigning goes back to the 1970s when Barclays were a target for the anti-apartheid movement (and rightly so). The past day has provided yet more ammunition for those who would like to single out this bank for attention, and I admit that I have been one of them since that has been what the media has demanded. And yet, we need to stand back and be calm (to misquote the famous poster).

Of course Barclays has admitted to a serious allegation. They helped rig markets. It is likely that ordinary people paid the cost of that manipulation. It is impossible that senior management did not know about this, but it is likely that they will walk away largely unscathed from the whole debacle, their bonuses apart.

It is however important to put this in context. Barclays was not alone in rigging this market. Indeed, they could not have done it alone. This failure was not, therefore, a failure of a particular bank. It was a failure of the banking system.

It is also very clear now that regulators knew about this failure by 2006, at least, and yet it has taken until 2012 for the first penalty to be imposed. There has, therefore, been a failure of the regulatory system as well, and a systemic one at that. The question is not therefore whether Bob Diamond should go (he should, very obviously) or whether Barclays  and other should be prosecuted (as seems possible to me under section 4 of the Fraud Act 2006); the real question should be what causes systemic failure, and what can we do about it. The answer to that question is to first of all change regulation and secondly to change the nature of banking.  In both cases the reason for change is a simple one, which is that the existing models of both banking and regulation are based on false hypotheses.

As Lord Turner reported in his 2009 report on the financial crash, regulation at the Financial Services Authority was based on the assumption that the efficient market hypothesis held true (page 39, here) He realised then that this was not true. Perhaps most importantly, two assumptions the FSA made, which were that market prices are good indicators of rationally evaluated economic value and that market discipline can be used as an effective tool in constraining harmful risk taking can now be seen to be not just wrong, but that they were fundamentally flouted  by banks rigging prices and manipulating markets to mitigate their risk at cost to others.

No wonder we had a crash: regulation assumed a bunch of innocent price taking banks all subservient to the market when nothing could have been further from the truth. It’s an unfortunate fact that regulation will have to be rebuilt on the basis that markets can’t be trusted and regulatory intervention will have to be the norm, not the exception. The era of "light touch regulation" has to be over.

That has implications for the structure of banking too. The assumption that they can be trusted is also implicit in the Vickers recommendations. Their suggestion that banks can be split under common ownership is dependent upon the belief that Chinese walls will be respected. It’s now clear that banks do not respect rules. More than that, manipulation between departments who were not meant to talk to each other was clearly commonplace at Barclays, and presumably elsewhere. On that basis Vickers has now to be consigned to history: the only way forward is to break banks up with high street and investment banking operations separated, for good.

So far we’ve wasted four years since the crash doing nothing to address the problems in our banking system. If this latest Barclays debacle does anything it suggests that the time for prevarication is over.

Barclays chief executive Bob Diamond has resisted calls for his resignation. Photograph: Getty Images.

Richard Murphy is an adviser to the Tax Justice Network and the TUC on taxation and economic issues. He is also the director of Tax Research LLP.

Photo: Getty
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In focusing on the famous few, we risk doing a disservice to all victims of child sexual abuse

There is a danger that we make it harder, not easier, for victims to come forward in future. 

Back in the 1970s when relations between journalists and police were somewhat different to today a simple ritual would be carried out around the country at various times throughout the week.

Reporters, eager for information for their regional newspaper, would take a trip to the local station and there would be met by a desk sergeant who would helpfully skim through details in the crime Incident Book.

Among the entries about petty thefts, burglaries and road accidents there would occasionally be a reference to an allegation of incest. And at this point the sergeant and journalist might well screw-up their faces, shake their heads and swiftly move on to the next log. The subject was basically taboo, seen as something ‘a bit mucky,’ not what was wanted in a family newspaper.

And that’s really the way things stayed until 1986 when ChildLine was set up by Dame Esther Rantzen in the wake of a BBC programme about child abuse. For the first time children felt able to speak out about being sexually assaulted by the very adults whose role in life was to protect them.

And for the first time the picture became clear about what incest really meant in many cases. It wasn’t simply a low level crime to be swept under the carpet in case it scratched people’s sensitivities. It frequently involved children being abused by members of their close family, repeatedly, over many years.

Slowly but surely as the years rolled on the NSPCC continued to press the message about the prevalence of child sexual abuse, while encouraging victims to come forward. During this time the corrosive effects of this most insidious crime have been painfully detailed by many of those whose lives have been derailed by it. And of course the details of the hundreds of opportunistic sexual assaults committed by Jimmy Savile have been indelibly branded onto the nation’s consciousness.

It’s been a long road - particularly for those who were raped or otherwise abused as children and are now well into their later years - to bring society around to accepting that this is not to be treated as a dark secret that we really don’t want to expose to daylight. Many of those who called our helpline during the early days of the Savile investigation had never told anyone about the traumatic events of their childhoods despite the fact they had reached retirement age.

So, having buried the taboo, we seem to be in danger of giving it the kiss of life with the way some cases of alleged abuse are now being perceived.

It’s quite right that all claims of sexual assault should be investigated, tested and, where there is a case, pursued through the judicial system. No one is above the law, whether a ‘celebrity’ or a lord.

But we seem to have lost a sense of perspective when it comes to these crimes with vast resources being allocated to a handful of cases while many thousands of reported incidents are virtually on hold.

The police should never have to apologise for investigating crimes and following leads. However, if allegations are false or cannot be substantiated they should say so. This would be a strength not a weakness.

It is, of course, difficult that in many of the high-profile cases of recent times the identities of those under investigation have not been officially released by the police but have come to light through other means. Yet we have to deal with the world as it is not as we wish it would be and once names are common knowledge the results of the investigations centring on them should be made public.

When it emerges that someone in the public eye is being investigated for non-recent child abuse it obviously stirs the interest of the media whose appetite can be insatiable. This puts pressure on the police who don’t want to repeat the mistakes of the past by allowing offenders to slip through their hands.  And so there is a danger, as has been seen in recent cases, that officers lack confidence in declaring there is a lack of evidence or the allegations are not true. 

The disproportionate weight of media attention given to say, Sir Edward Heath, as opposed to the Bradford grooming gang sentenced this week, shows there is a danger the pendulum is swinging too far the other way. This threatens the painstaking work invested in ensuring the public and our institutions recognise child abuse as a very real danger. 

Whilst high profile cases have helped the cause there is now a real risk that the all-encompassing focus on them does both victims of abuse and those advocating on their behalf a fundamental disservice.

As the public watches high -profile cases collapsing amidst a media fanfare genuine convictions made across the country week in week out go virtually unannounced. If this trend continues they may start to believe that child sexual abuse isn’t the prolific problem we know it to be.

So, while detectives peer into the mists of time, searching for long lost clues, we have to face the unpalatable possibility that offences being committed today will in turn only be investigated fully in years or decades' time because there is not the manpower to deal with them right now.

So, now the Goddard Inquiry is in full swing, taking evidence about allegations of child sex crimes involving ‘well known people’ as well as institutional abuse, how do we ensure we don’t fail today’s victims?

If they start to think their stories are going to be diminished by the continuing furore over how some senior public figures have been treated by the police they will stay silent. Therefore we have to continue to encourage them to come forward, to give them the confidence of knowing they will be listened to.

If we don’t we will find ourselves back in those incestuous days where people conspired to say and do nothing to prevent child abuse.

Peter Wanless is Chief Executive of the NSPCC.