Bank bonuses make a mockery of the Tories' rhetoric

Payments hit £14bn despite the coalition's pledge to block "unacceptable bonuses".

We've already highlighted five stories that slipped under the radar this week as the phone hacking scandal gathered pace. Here's another one: figures from the ONS show that bank bonuses totalled £14bn this year, unchanged from the previous year and higher than the 2008-09 figure of £12 billion. Significantly, the bonus pool is now 58 per cent higher than in 2000-01. Banks and insurance companies paid 40 per cent of all bonuses despite employing only 4 per cent of the workforce.

It's further evidence of the gap between the Tories' tough rhetoric in opposition and their inaction in power. In 2009, George Osborne called for a ban on bonuses at banks that had received any sort of government guarantee. He told the Guardian:

It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees ... It must stop.

He later promised to block all cash bonuses over £2,000. Even the coalition agreement pledged to tackle "unacceptable bonuses in the financial services sector". But the government allowed Barclays chief executive Bob Diamond to receive a bonus of £6.5m and Stephen Hester, head of the 83 per cent state-owned RBS, to receive a bonus of £2m.

We're not all in this together


Bank bonuses are 58 per cent higher than in 2000-1. Source:ONS

Remarkably, as Will Straw points out at Left Foot Forward, the bonuses paid out by nationalised banks exceeded those paid out to every public sector worker in the country. The public sector, which employs 22 per cent of the workforce, accounted for 1.5 per cent of all bonus payments. But the publicly owned banks, which employ just 1 per cent of the workforce, accounted for 1.6 per cent. It's yet more evidence that, contrary to George Osborne, we are not all in this together.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
Show Hide image

The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.