How the bankers got away with it

Bank bonuses fell in the wake of the financial crash but have risen since.

In my column in this week's magazine (go on, get a subscription), I look at the level of bank bonuses before and after the financial crisis.

Since the crash, mindful of what the Harvard philosopher Michael Sandel described as "bailout outrage", politicians of all three parties have indulged in banker-bashing. But as the graph below shows, there is a significant gap between rhetoric and reality.

Bonus payouts peaked at £11.5bn in 2007 – the year before the crash – and fell to £5.3bn in 2008 following the bailout. Yet since then, as general living standards have continued to fall, the bonus pool has exceeded £7bn for two years running.

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With investment bank revenues falling, bonus levels are likely to be lower this year than in 2010. The 83 per cent state-owned RBS, which is expected to report a loss of roughly £613m, may pay nearer £1bn in bonuses than last year's £1.3bn. Such payments are at odds with the Tories' tough rhetoric in opposition, however. In 2009, George Osborne called for a ban on bonuses at banks that had received any sort of government guarantee. He later promised to block all cash bonuses over £2,000.

Osborne wasn't the only one. In his 2008 conference speech, David Cameron memorably spoke of a "day of reckoning" for the banks and, in his preface to the Liberal Democrats' manifesto, Nick Clegg declared that the banks should not be allowed to "ride roughshod" over the economy while handing out bonuses "by the bucketload".

The coalition's bank levy, which excludes the first £20bn of liabilities, is expected to raise just £1.25bn this year. By contrast, Alistair Darling's 50 per cent tax on bonuses over £25,000 raised £3.5bn last year.

Ministers rightly point out that the levy will raise more in subsequent years (£2.3bn in 2012 and £2.6bn in 2013) but they have yet to explain the shortfall in revenue this year. For reasons unknown, the government has set the levy at just 0.045 per cent this year but at 0.075 per cent next year and in following years.

The Financial Services Authority has ruled that at least half of all bonuses must be paid in shares rather than cash. But to voters facing the biggest squeeze in living standards since the 1920s, this is likely to be a distinction without a difference.

George Eaton is political editor of the New Statesman.

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Leader: Mourning in Manchester

Yet another attack shows we are going to have to get to used to the idea that our liberalism and our freedoms can only be preserved by a strong state.

Children are murdered and maimed by a suicide bomber as they are leaving a pop concert in Manchester. As a consequence, the government raises the terror threat to “critical”, which implies that another attack is imminent, and the army is sent out on to the streets of our cities in an attempt to reassure and encourage all good citizens to carry on as normal. The general election campaign is suspended. Islamic State gleefully denounces the murdered and wounded as “crusaders” and “polytheists”.

Meanwhile, the usual questions are asked, as they are after each new Islamist terrorist atrocity. Why do they hate us so much? Have they no conscience or pity or sense of fellow feeling? We hear, too, the same platitudes: there is more that unites us than divides us, and so on. And so we wait for the next attack on innocent civilians, the next assault on the free and open society, the next demonstration that Islamism is the world’s most malignant and dangerous ideology.

The truth of the matter is that the Manchester suicide bomber, Salman Ramadan Abedi, was born and educated in Britain. He was 22 when he chose to end his own life. He had grown up among us: indeed, like the London bombers of 7 July 2005, you could call him, however reluctantly, one of us. The son of Libyan refugees, he supported Manchester United, studied business management at Salford University and worshipped at Didsbury Mosque. Yet he hated this country and its people so viscerally that he was prepared to blow himself up in an attempt to murder and wound as many of his fellow citizens as possible.

The Manchester massacre was an act of nihilism by a wicked man. It was also sadly inevitable. “The bomb was,” writes the Mancunian cultural commentator Stuart Maconie on page 26, “as far as we can guess, an attack on the fans of a young American woman and entertainer, on the frivolousness and foolishness and fun of young girlhood, on lipstick and dressing up and dancing, on ‘boyfs’ and ‘bezzies’ and all the other freedoms that so enrage the fanatics and contradict their idiot dogmas. Hatred of women is a smouldering core of their wider, deeper loathing for us. But to single out children feels like a new low of wickedness.”

We understand the geopolitical context for the atrocity. IS is under assault and in retreat in its former strongholds of Mosul and Raqqa. Instead of urging recruits to migrate to the “caliphate”, IS has been urging its sympathisers and operatives in Europe to carry out attacks in their countries of residence. As our contributing writer and terrorism expert, Shiraz Maher, explains on page 22, these attacks are considered to be acts of revenge by the foot soldiers and fellow-travellers of the caliphate. There have been Western interventions in Muslim lands and so, in their view, all civilians in Western countries are legitimate targets for retaliatory violence.

An ever-present threat of terrorism is the new reality of our lives in Europe. If these zealots can murder children at an Ariana Grande concert in Manchester, there is no action that they would not consider unconscionable. And in this country there are many thousands – perhaps even tens of thousands – who are in thrall to Islamist ideology. “Terror makes the new future possible,” the American Don DeLillo wrote in his novel Mao II, long before the al-Qaeda attacks of 11 September 2001. The main work of terrorists “involves mid-air explosions and crumbled buildings. This is the new tragic narrative.”

Immediately after the Paris attacks in November 2015, John Gray reminded us in these pages of how “peaceful coexistence is not the default condition of modern humankind”. We are going to have to get used to the idea that our liberalism and our freedoms can only be preserved by a strong state. “The progressive narrative in which freedom is advancing throughout the world has left liberal societies unaware of their fragility,” John Gray wrote. Liberals may not like it, but a strong state is the precondition of any civilised social order. Certain cherished freedoms may have to be compromised. This is the new tragic narrative.

This article first appeared in the 25 May 2017 issue of the New Statesman, Why Islamic State targets Britain

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