Why Bob Diamond's bonus is a legitimate target

Don't believe he myth that Barclays didn’t benefit from state support.

It's payday for the man Peter Mandelson once described as the "unacceptable face of banking". Barclays chief Bob Diamond won't comment on the size of his bonus but it's thought to be in the region of £3m.

It was Diamond who famously told MPs last year that the time for "remorse and apology" was over but, as you may have noticed, not everyone agrees. In response, we can expect Barclays, which announced profits of £5.9bn this morning, to remind us that it did not receive a pound of taxpayers' money. Yet this seemingly plausible defence does not bear scrutiny. Though it was not bailed out by the state, Barclays benefited immensely from the emergency measures introduced by the government to prevent a sector-wide collapse.

As John Varley, the bank's former chief executive, conceded in 2009:

There are two ways I would say the system as a whole benefited generically.

One was in the injection of liquidity undertaken by the Bank of England and a new structure put in place in March 2008.

And the other was the making available of guarantees from government for funding undertaken by banks. It is important to recognise that in each case the banks were encouraged to use these new structures that were put in place and we did.

It is also important to recognise that we were required and we did pay a price for these things, but I'm not trivialising the importance of the intervention. It was important.

Without the state-led bailout of RBS and Lloyds-HBOS, there would have been a run on all the banks, including Barclays. It was for this reason that George Osborne, while shadow chancellor, called for a ban on bonuses at banks that had received any sort of government guarantee.

"It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees . . . it must stop," he said in August 2009.

The response from the PM's spokesman today? "It is not for me to comment on pay deals for individuals at private-sector companies." Under pressure from the right of his party, which accuses him of joining an anti-business witch hunt, Cameron has refused to join the fray.

Conversely, Ed Miliband has widened his attack on bankers' pay to include Barclays and other non state-owned banks. In a speech last night, he declared: "Some argue that it is no business of the public what bonuses banks pay. I fundamentally disagree. Because even banks which are not publicly owned implicitly benefit from a taxpayer guarantee, to the tune of billions of pounds."

The challenge for Labour is to ensure it reaps some political benefit from this new dividing line.

George Eaton is political editor of the New Statesman.

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Labour’s best general election bet is Keir Starmer

The shadow secretary for Brexit has the heart of a Remainer - but head of a pragmatic politician in Brexit Britain. 

In a different election, the shadow Brexit secretary Keir Starmer might have been written off as too quiet a man. Instead - as he set out his plans to scrap the Brexit white paper and offer EU citizens reassurance on “Day One” in the grand hall of the Institute of Civil Engineers - the audience burst into spontaneous applause. 

For voters now torn between their loyalty to Labour and Remain, Starmer is a reassuring figure. Although he says he respects the Brexit vote, the former director of public prosecutions is instinctively in favour of collaborating with Europe. He even wedges phrases like “regulatory alignment” into his speeches. When a journalist asked about the practicality of giving EU citizens right to remain before UK citizens abroad have received similar promises, he retorted: “The way you just described it is to use people as bargaining chips… We would not do that.”

He is also clear about the need for Parliament to vote on a Brexit deal in the autumn of 2018, for a transitional agreement to replace the cliff edge, and for membership of the single market and customs union to be back on the table. When pressed on the option of a second referendum, he said: “The whole point of trying to involve Parliament in the process is that when we get to the final vote, Parliament has had its say.” His main argument against a second referendum idea is that it doesn’t compare like with like, if a transitional deal is already in place. For Remainers, that doesn't sound like a blanket veto of #EUref2. 

Could Leave voters in the provinces warm to the London MP for Holborn and St Pancras? The answer seems to be no – The Daily Express, voice of the blue passport brigade, branded his speech “a plot”. But Starmer is at least respectful of the Brexit vote, as it stands. His speech was introduced by Jenny Chapman, MP for Darlington, who berated Westminster for their attitude to Leave voters, and declared: “I would not be standing here if the Labour Party were in anyway attempting to block Brexit.” Yes, Labour supporters who voted Leave may prefer a Brexiteer like Kate Hoey to Starmer,  but he's in the shadow Cabinet and she's on a boat with Nigel Farage. 

Then there’s the fact Starmer has done his homework. His argument is coherent. His speech was peppered with references to “businesses I spoke to”. He has travelled around the country. He accepts that Brexit means changing freedom of movement rules. Unlike Clive Lewis, often talked about as another leadership contender, he did not resign but voted for the Article 50 Bill. He is one of the rare shadow cabinet members before June 2016 who rejoined the front bench. This also matters as far as Labour members are concerned – a March poll found they disapproved of the way Labour has handled Brexit, but remain loyal to Jeremy Corbyn. 

Finally, for those voters who, like Brenda, reacted to news of a general election by complaining "Not ANOTHER one", Starmer has some of the same appeal as Theresa May - he seems competent and grown-up. While EU regulation may be intensely fascinating to Brexiteers and Brussels correspondents, I suspect that by 2019 most of the British public's overwhelming reaction to Brexit will be boredom. Starmer's willingness to step up to the job matters. 

Starmer may not have the grassroots touch of the Labour leader, nor the charisma of backbench dissidents like Chuka Umunna, but the party should make him the de facto face of the campaign.  In the hysterics of a Brexit election, a quiet man may be just what Labour needs.

What did Keir Starmer say? The key points of his speech

  • An immediate guarantee that all EU nationals currently living in the UK will see no change in their legal status as a result of Brexit, while seeking reciprocal measures for UK citizens in the EU. 
  • Replacing the Tories’ Great Repeal Bill with an EU Rights and Protections Bill which fully protects consumer, worker and environmental rights.
  • A replacement White Paper with a strong emphasis on retaining the benefits of the single market and the customs union. 
  • The devolution of any new powers that are transferred back from Brussels should go straight to the relevant devolved body, whether regional government in England or the devolved administrations in Scotland, Wales and Northern Ireland.
  • Parliament should be fully involved in the Brexit deal, and MPs should be able to vote on the deal in autumn 2018.
  • A commitment to seek to negotiate strong transitional arrangements when leaving the EU and to ensure there is no cliff-edge for the UK economy. 
  • An acceptance that freedom of movement will end with leaving the EU, but a commitment to prioritise jobs and economy in the negotiations.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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