The deal to bail out the Cypriot banks by imposing a levy on all bank deposits unravelled almost as soon as it was made. The ultimate nightmare loomed: a run on banks across the whole of southern Europe. Moreover, the Cypriots approached Russia for financial support, raising the possibility that Vladimir Putin will acquire a client state in the Mediterranean.
Yet one can see how the levy may have seemed a good, even progressive idea. The poorest people don’t have money to deposit in the banks. Imposing what amounts to a wealth tax on depositors is better than what governments usually do in a financial crisis: cut public services and public-sector wages; raise sales taxes, which hit the poor hardest; and reduce state pensions and social security payments. Equally, if Cyprus were compelled to leave the euro, everybody’s money would fall steeply in value, regardless of how much money they had in bank deposits.
The obvious course – which may still emerge from the crisis – was to exempt deposits of less than €100,000 and to hit higher deposits with a 15.1 per cent levy instead of the 9.9 per cent proposed. That would hurt money-laundering Russian oligarchs without affecting ordinary savers. The Cypriot economy, however, is heavily dependent on Russian and other “inward investment”; the higher the levy on big deposits, the greater the threat to the island’s future as an offshore tax haven.
Sound familiar? Yes, George Osborne and other Tories, and for that matter New Labourites, use the same argument against more serious measures to limit bankers’ bonuses and tax rich foreigners in London.
The levy was dry
Whatever the outcome of the Cypriot crisis, the genie is out of the bottle. Right-wing propagandists have always warned against electing socialist governments on the grounds that they will “expropriate” savings. Maybe voters will now understand that their “nest eggs”, as newspapers cosily call them, are just as likely to be looted by capitalists. The levy is an unusually transparent example. The financial services industry, including pension funds, routinely loots savings through poor rates of return, high charges and misselling of “products” such as insurance. By comparison, governments of both left and right are mere amateurs.
Hacking the system
If the system of press regulation agreed by the three main political parties survives a threatened boycott by big newspaper groups, its effectiveness will depend on the individuals who do the regulating. How will they be appointed? This is not easy to establish.
The new regulatory system appears to have ten separate panels and committees involving at least 56 people, some of whom have no function other than to appoint another panel and, presumably, to choose replacements when vacancies arise. Whether the first panel can sack its appointees for insanity or idleness is unclear. The potential for disputes within and between panels is considerable. The regulator may have difficulty ever lumbering into action.
That should be one comfort for the press. Another is that, though serving editors are excluded from most panels, “industry members” will occupy a little short of 50 per cent of the places on nearly all. I’m not sure how an “industry member” will be defined. For example, will my friend and former colleague Brian Cathcart, the professor in journalism at Kingston University and director of Hacked Off (who, according to the Daily Mail’s editor, Paul Dacre, has “an agenda”), count, on the grounds that he still occasionally writes for newspapers? Whatever the answer, the “industry members” are likely to carry disproportionate weight because of their superior inside knowledge. The danger, as with all regulators, is of “producer capture” rather than, as the potential press refuseniks claim to fear, too much sympathy for vexatious complainants.
The argument over press regulation led to a rash of round robins, supporting one side or the other, in the letters pages. The day MPs debated the subject, the Times had three. I signed a few such things in the past but resolved, some 20 years ago, to sign no more. What is the point of them? Presumably the signatories expect their names to carry persuasive power. But why should I, or any MP, care that Nick Cohen, Suzanne Moore, Mick Hume, James Delingpole and 20 others believe “the mere whiff” of regulation is already “stifling what people feel they can say and write”? Nearly all these hacks’ views were already well known and I hadn’t noticed them being stifled. Frankly, I’d be more interested to hear from 24 pensioners in Barnsley.
Disgusted of Islington
The Mail has a daily lottery that awards prizes if “unique numbers” printed at the bottom of your copy’s back page match those printed at the top of page two. The winners, published the next day, almost invariably come from places such as Sutton Coldfield, Ilkley, Bolton, Lowestoft and Tunbridge Wells and hardly ever from Greater London boroughs – particularly the more fashionable ones. The Mail is proud to be the paper of “Middle England” but surely it also has a significant number of metropolitan readers. Are they too ashamed of reading the Mail to claim their prizes?
Oliver Bullough, Observations, page 15