Banks tried to hide their bonuses, but now the game is up. What next?

Britain has always valued a sense of fair play. It is time to demand a fair banking system.

2011 was a year of constraint and contrition for the banking sector. Bonus pools were reduced, balance sheets slimmed down and high profile bankers heroically waived their bonuses.

Or so the banks' PR machines would have had us believe. Last Friday, as analysts trawled through Barclays and RBS's annual report and Lloyds' pay statement, a very different picture emerged from that painted by the banks.

Bob Diamond's pay packet for 2011 could be as much as £17.7 million. The head of state-backed RBS' investment banking division, John Hourican, was handed a package worth £7.4 million. And the Chief Executive of Lloyds netted £3.5 million. All in all Barclays, Lloyds and RBS paid out in excess of £90 million to top executives in 2011.

There is a clear injustice in a sector which is implicitly and explicitly subsidised by the taxpayer awarding itself bloated rewards at a time when the public are enduring austerity cuts, a squeeze on real incomes, and rising unemployment.

But the public outrage taps into something deeper. After all, the British sense of fair play has always been premised on there being haves and have-nots.

Public anger taps into the stark fact that the banking system is failing to fulfil some of its basic functions because the industry is grotesquely skewed towards socially unproductive activities that allow a small elite to extract vast wealth to the detriment of the many.

Despite a financial crisis, a £1.2 trillion bailout and ongoing public outcry, it can still seem like there is no viable alternative to business as usual. But it is worth reminding ourselves that this is not universal: the British banking system stands out from its US and European counterparts.

Firstly, the UK banking sector is one of the most concentrated in the world. In the retail sector six large national banks account for 92 per cent of personal current accounts, 85 per cent of mortgages, and 88 per cent of small business accounts .

Secondly, it is one of the least diverse in terms of the types and functions of financial providers. Whereas in the UK, the big four dominate the high street, in Germany a wide range of local and mutually owned banks have a 70 per cent share of the market for loans and deposits.

Thirdly, it is the largest in size relative to our economy. Assets of UK banks are almost six times GDP, compared to the US where they are roughly equal.

These features enabled the City to generate huge profits in the boom years, but they are also root causes of its inability to serve the needs of households and businesses.

The financial crisis exploded the myth that profits booked in the financial sector means wealth for the UK. Figures from the IMF show that despite the fact that, in relative terms, the UK banking sector is six times the size of its US equivalent, it generates the same amount of total tax revenue -- less than a paltry 2 per cent.

Now the long-term effects this British exceptionalism are clear for all to see. We have a banking system unable to allocate credit to viable businesses, provide bank accounts to low-income households, or even keep our money safe.

According to the New Economics Foundation, the UK lags other countries in achieving universal access to financial products and services, with 1.5m adults still lacking a current account. The branch network continues to shrink with a 44 per cent reduction since 1990 leaving more communities unbanked.

And Britain's small businesses struggle more than their European and American counterparts to access credit, with some 370,000 SMEs failing to secure loan finance from mainstream financial institutions in 2011 alone.

But what comes next?

Martin Kettle recently argued that the mood of the nation is to muddle along. The public just want to get back to normal with as little fuss as possible. Whilst it may be true that there is little appetite for a revolutionary overthrow of liberal capitalism, there is clear evidence that there is growing interest in a different way of doing things.

The alternative financial sector has flourished in the aftermath of the financial crisis -- filling the gaps where the big banks are simply unable to provide.

Households and businesses are becoming increasingly dependent on these alternatives. Unfortunately their rise is paralleled -- in fact dwarfed by the increase in doorstop and payday lenders which only goes to demonstrate the size of the unmet market demand.

These alternative institutions are still a tiny part of the financial ecosystem. But the sector is at a tipping point. It now needs to work together to create a narrative which takes it beyond a niche industry. It needs to the let the public know that there is alternative out there, and why its better for them.

That's why we have launched Move Your Money UK, a campaign encouraging people to move their money to ethical, local or mutual financial providers. There is appetite for change. We may not be in a revolutionary moment, but the public are no longer willing to accept business as usual from our banking sector and are looking for something better.

Louis Brooke is a co-founder of Move Your Money UK. Follow the campaign on Twitter @moveyourmoneyuk and Facebook.

Louis Brooke is a spokesperson for Move Your Money UK, a not for profit campaign group, promoting alternatives to the big banks. He is also communications manager for London Rebuilding Society, and co-founder and chairman of educational resource company now>press>play.

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It's time for Jeremy Corbyn's supporters to take on the unions

The union support for expanding Heathrow reflects a certain conservatism. 

The government’s announcement that it will go ahead with a third runway at Heathrow seems to have unlocked an array of demons. It has also created some unlikely alliances. Zac Goldsmith, the pro-Brexit mayoral candidate whose campaign was widely condemned as racist, is seeking to re-invent himself as an environmental champion, campaigning alongside fellow Heathrow MP John McDonnell. And the Richmond byelection which he is triggering could yet become a test case for Labour’s progressive alliance enthusiasts.

But perhaps the most significant position is that of the major unions. To the shock of many less seasoned activists on the left, Unite, the largest trade union in the UK and a consistent supporter of Corbyn’s leadership, has loudly called on the government to “be bold and build” the new runway, even now urging it to accelerate the process. Far from being a revelation, Unite’s position on Heathrow is longstanding – and it points to the lasting power and influence of an establishment trade unionism.

In August, the TUC co-ordinated a joint statement from five unions, urging the government to go ahead with the third runway. Like the rest of the unions’ lobbying efforts, it was coordinated with other pro-expansion stakeholders like the CBI, and it could just as easily have been authored by the business lobby. Heathrow expansion will, it says, “deliver at least £147bn to UK GDP and 70,000 new jobs”. “Trade unions and their members”, said Frances O’Grady, “stand ready to work to help the government successfully deliver this next major national infrastructure project”.

The logic that drives unions to support projects like Heathrow expansion – and which drives the GMB union to support fracking and Trident renewal – is grounded in a model of trade unionism which focuses not on transforming the workplace, but on the narrowly-defined interests of workers – job creation, economic growth and a larger share of the pie. It views the trade union movement not as merely antagonistic to employers, but as a responsible lobbying partner for business and industry, and as a means of mediating workers’ demands in a way that is steady and acceptable to the state and the economic system. This model, and the politics that accompanied it, is why, historically, trade unions were a conservative influence on Labour’s internal politics.

Nothing could be more at odds with the political, environmental and economic realities of the 21st century. It is not in the interests of workers or ordinary people to live on a planet which is slowly becoming uninhabitable. To avoid catastrophic global warming, we need to leave the vast majority of fossil fuels in the ground – that probably means shrinking the aviation industry, not expanding Heathrow’s passenger capacity by 70 per cent. All of this is implicitly recognised by Jeremy Corbyn’s environmental and industrial strategy, which aims to create a million new jobs and build a million new homes while switching to renewables and democratising the energy industry.

The gap between Corbyn’s policies and the policies of many major trade unions tells us something deeper about the challenges facing the left. If Corbynism is an unfinished revolution in the Labour Party machine, it is one which has barely started in the wider labour movement.

The gradual leftward shift in many unions’ political allegiances has broadened the alliance around Corbyn and given him strength in numbers and resources, but it is often as much about internal union politics as it is a deep conviction for what Corbyn represents. Unison general secretary Dave Prentis did back Corbyn’s re-election following a ballot of members, but is hardly a left-winger, and the union’s votes on Labour’s NEC are not safely aligned to the left.

The political radicalisation of the unions has been matched, if anything, by a decline in coordinated industrial action. The national strategy that fuelled the anti-austerity movement in 2011 and 2012 is only a memory. The democratic and organising culture in many unions, too, remains bureaucratic and opaque. Trade unions have played a key role in Corbyn’s coalition, but without a significant shift in their internal culture and a shift away from their role as respectable partners of industry, they could easily scupper the project as well. 

The expansion of Heathrow airport is a step backwards for the future of the planet and the interests of ordinary people – and yet, if it happens at all, it will have been made possible by the concerted efforts of key trade unions. This is not an aberration but a reminder that, despite their rhetorical flourishes in support of Corbyn, Britain’s trade unions are also in need of change. Any project that aims to transform the Labour party and wider society must also aim to transform the whole of the labour movement – from the shop floor to the corridors of power.