Mr Brown's bankers

The increasingly close relationship between banks and government pleases no one. But neither side ca

When the normally elusive, patrician John Varley, ­Barclays’ chief executive, turned up on Channel 4 News a week ago, to extol the virtues of what is known in the trade as “quantitative easing” (steps to make credit easier or printing money), it was clear that something was up.

Among Britain's coterie of high-street bankers, Barclays has done all in its power to avoid being ensnared in the various rescue plans for British banking concocted in Downing Street. It would rather put its faith in the Gulf ­potentates - who pumped £7.3bn into the bank in November - than take the taxpayer's shilling from Gordon Brown and Alistair Darling.

Barclays figured that when it comes to dealing with new Labour, there are always political strings attached. The Gulf statelets of Qatar and Abu Dhabi may charge more for their money, but they don't tell you how to run your business.

As the financial crisis worsens, threatening to turn Britain's recession into depression, the fates of British banking and government have become ever more entwined. Bankers have the privilege of being on the luncheon invitations list of the Prime Minister and the Chancellor of the Exchequer. But they can also expect to have their evenings and weekends interrupted, at a moment's notice, when the government summons them to action, as it did last weekend.

As one irritated banker told me last week: "Valuable senior executive time is being spent talking to government when we just want to get on with the business of lending again." In ­particular, there has been acute irritation at the way the Business Secretary, Lord Mandelson, trapped them into a plan (largely unformed) to lend a further £10bn to small and medium-sized businesses when several of the banks already had made commitments in this area.

Bankers see this as political grandstanding by Mandelson, who is determined that no Tory idea for dealing with the crisis goes unanswered. When the Conservatives proposed a scheme for National Insurance rebates to companies willing to take on unemployed workers, Mandelson replied with a £2,500 per head promise to every firm which saved a long-term jobless person. His small-business bailout plan was a direct response to a similar £50bn proposal by the Tories.

“Of course the government should interfere on a daily basis. Otherwise it would be a dereliction of duty”

All of this may be excellent politics, and Labour has shown an uncanny ability to bring respected City figures into its orbit to combat the credit crunch. Mervyn Davies, chairman of Standard Chartered, has been parachuted in as trade minister. Paul Myners is lording it over the banks from his perch as City minister. And the financial guru Sir Philip Hampton was tempted into the government’s net first as chairman of UK Financial Investments (the holding company for the UK’s shareholdings in the nationalised and part-nationalised banks) and more recently as chair of the very sick Royal Bank of Scotland (RBS).

Stephen Hester, brought in from British Land to rebuild confidence in RBS, has been a constant visitor to the Treasury since taking over at RBS's Edinburgh folie de grandeur headquarters in ­November. Last Sunday he turned up, curiously dressed in a shooting jacket and blue jeans. He joked: "Well, if I was going to be shot, I thought I might as well be wearing a shooting jacket."

As intimate as this increasingly cosy relationship between the bankers and government has become, the more troubled it is proving. There is already the feeling that the bankers taking the peerages and the privileges of office have become "quislings" of the financial sector, jumping to do the government's business when they would be better working from within the privately owned parts of the industry.

In the US, when bankers do join government they face the detailed scrutiny of their public and personal affairs from the Senate before confirmation. In Britain, they simply have to say yes to being "milord" for the rest of their lives.

Yet despite the glittering jobs for those brought into the government, in one way or another, there is surprisingly little respect for them in Whitehall. Dealing with the bankers is regarded as a necessary nuisance. Their arrogance is scoffed at behind closed doors and some have even been awarded disparaging nicknames. When it poured £37bn of new capital into the banks in November, new Labour vowed to deal with the bankers at "arm's length". A new institution, UK Financial Investments, headed by John Kingman, the senior Treasury official who masterminded the auction and then the nationalisation of Northern Rock, was placed in charge.

But, in my conversations with senior bankers, it has become increasingly clear that this relationship has become testy. Banks outside the government's clutches, such as the mighty HSBC (which makes most of its money overseas) and Barclays, have become irritated by government efforts to bounce them into ever more initiatives with which they do not want to be ­involved. This is not that surprising, given the lengths to which they have gone to avoid direct involvement with Whitehall. What is more intriguing is that those banks where the government has the whip hand - Lloyds Banking Group (the agglomeration of Lloyds TSB and HBOS) and the deeply damaged RBS - are also finding the new relationship with Whitehall stressful, time-consuming and difficult.

Lloyds TSB chairman Sir Victor Blank, who is close to the Prime Minister, enthusiastically embraced the idea of a takeover of HBOS, when first approached. It has been clear from the start, however, that Lloyds was unhappy with the restrictions the government planned to impose on dividend payments and bonuses to the workforce. Now it has crossed swords with Whitehall over plans it had to swap high-cost preference shares (which cost 12 per cent to service) for more ordinary shares, which would increase the decision-making power of government over the bank. In the end only RBS - keen to save £600m a year in interest - agreed to the changed terms.

Blank and the Lloyds TSB chief executive, Eric Daniels, should not be surprised by the long reach of Whitehall. As Dr Andrew Hilton, director of the City think tank the Centre for the Study of Financial Innovation, noted: "Of course the government should be interfering on a day-by-day basis. Otherwise it would be a dereliction of duty."

A senior banker at one of the bailed-out banks sees things very differently now after almost three months on the Whitehall leash.

"The government is flip-flopping from day to day. This is the politics of recession. There is very little joined-up thinking." This banker believes that Labour has been driving the process too hard, as it did last weekend when it put the final pieces in place for a new £419bn rescue plan (in addition to the £500bn already in place). In his view it would have been better if the Bank of England, like the Federal Reserve, America's central bank, had taken a leading role.

Clearly, in its first run at the problems of the banking system, the Treasury and Downing Street have made a number of serious errors, which they are now repairing. The decision taken in February 2008 to encourage Northern Rock, the first bank to be nationalised, to run down its mortgage book was plainly a daft error. It resulted in a decrease in the capacity of the mortgage lenders to continue to make loans, just as the housing market was going into its most serious nosedive in its history. Similarly, the Treasury’s decision to charge the partly nationalised banks 12 per cent for preference shares (against much lower figures

in the US and Europe) was a ghastly mistake because it encouraged banks to accumulate capital rather than lend.

Yet for all that, it is more comfortable for banks to be inside the government tent than outside. Barclays, for all its bravado, is regarded in Whitehall as something of a pariah.

Banks around the world have been coming clean on the bad debts they hold on their balance sheets. Among those acknowledging the mistakes of the past and seeking to clean them up have been New York's Citigroup and the mighty Bank of America and Deutsche Bank of Germany.

There is a belief among governments around confidence can never be restored to the banking market. John Varley sees things differently. Barclays maintains that it is still profitable (and will report profits of £5bn-£6bn shortly) and that its toxic debt is of better quality than those of other banks so it doesn't need to mark down its value in the balance sheet. This runs counter, however, to Gordon Brown's determination that toxic debt is fully disclosed. It was a battle that Barclays, armed with its Arab money, looked set to win despite the discomfort of being seen as a renegade by the government.

But in the end, if Barclays' shares continue to slide (as has been the case recently) it may have no choice - despite a spirited show of independence - but to seek some form of Treasury assistance. Then it may find that there is no such thing as independent action once the cold hand of government is sitting on your shoulder.

Alex Brummer is City editor of the Daily Mail

Banking business

Sir Fred Goodwin

Former Chief executive of RBS for period during which it accrued losses of £28bn, the biggest loss in British history. Sir Fred's pay for the year 2007 amounted to £4.2 million. He left with a pension pot of more than £8 million.

Sir Victor Blank

As chairman of Lloyds was involved in talks with government over merger with HBOS. Government owns 43 per cent. Lloyds celebrated £17 bn government bailout with £20,000 party at Gleneagles. Blank earns £600,000; Chief executive Eric Daniels earns £2.9m. As Lloyds shares slumped 48 per cent, Blank told BBC "We have been able to fund ourselves pretty effectively."

John Varley

Chief Executive, Barclays, which has no government stake at present. Varley, 52, was finance director of Barclays 2000-03. In 2007, despite having no accounting qualifications became member of Gordon Brown's High Level Group on City Competitiveness. Salary in 2007: £2.4m

Mervyn Davies

As Chairman of Standard Chartered was parachuted in as Trade Minister. Aged 52, he already chaired Gordon Brown's Business Council for Britain, set up in 2007. Will become a life peer. Awarded CBE in 2002 for services to the financial sector and the community in Hong Kong.

This article first appeared in the 26 January 2009 issue of the New Statesman, Nixon went to China... Will Obama go to Iran?

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The age of loneliness

Profound changes in technology, work and community are transforming our ultrasocial species into a population of loners.

Our dominant ideology is based on a lie. A series of lies, in fact, but I’ll focus on just one. This is the claim that we are, above all else, self-interested – that we seek to enhance our own wealth and power with little regard for the impact on others.

Some economists use a term to describe this presumed state of being – Homo economicus, or self-maximising man. The concept was formulated, by J S Mill and others, as a thought experiment. Soon it became a modelling tool. Then it became an ideal. Then it evolved into a description of who we really are.

It could not be further from the truth. To study human behaviour is to become aware of how weird we are. Many species will go to great lengths to help and protect their close kin. One or two will show occasional altruism towards unrelated members of their kind. But no species possesses a capacity for general altruism that is anywhere close to our own.

With the possible exception of naked mole-rats, we have the most social minds of all mammals. These minds evolved as an essential means of survival. Slow, weak, armed with rounded teeth and flimsy nails in a world of fangs and claws and horns and tusks, we survived through co-operation, reciprocity and mutual defence, all of which developed to a remarkable degree.

A review paper in the journal Frontiers in Psychology observes that Homo economicus  might be a reasonable description of chimpanzees. “Outsiders . . . would not expect to receive offers of food or solicitude; rather, they would be fiercely attacked . . . food is shared only under harassment; even mothers will not voluntarily offer novel foods to their own infants unless the infants beg for them.” But it is an unreasonable description of human beings.

How many of your friends, colleagues and neighbours behave like chimpanzees? A few, perhaps. If so, are they respected or reviled? Some people do appear to act as if they have no interests but their own – Philip Green and Mike Ashley strike me as possible examples – but their behaviour ­attracts general revulsion. The news is filled with spectacular instances of human viciousness: although psychopaths are rare, their deeds fill the papers. Daily acts of kindness are seldom reported, because they are everywhere.

Every day, I see people helping others with luggage, offering to cede their place in a queue, giving money to the homeless, setting aside time for others, volunteering for causes that offer no material reward. Alongside these quotidian instances are extreme and stunning cases. I think of my Dutch mother-in-law, whose family took in a six-year-old Jewish boy – a stranger – and hid him in their house for two years during the German occupation of the Netherlands. Had he been discovered, they would all have been sent to a concentration camp.

Studies suggest that altruistic tendencies are innate: from the age of 14 months, children try to help each other, attempting to hand over objects another child can’t reach. At the age of two, they start to share valued possessions. By the time they are three, they begin to protest against other people’s violation of moral norms.

Perhaps because we are told by the media, think tanks and politicians that competition and self-interest are the defining norms of human life, we disastrously mischaracterise the way in which other people behave. A survey commissioned by the Common Cause Foundation reported that 78 per cent of respondents believe others to be more selfish than they really are.

I do not wish to suggest that this mythology of selfishness is the sole or even principal cause of the epidemic of loneliness now sweeping the world. But it is likely to contribute to the plague by breeding suspicion and a sense of threat. It also appears to provide a doctrine of justification for those afflicted by isolation, a doctrine that sees individualism as a higher state of existence than community. Perhaps it is hardly surprising that Britain, the European nation in which neoliberalism is most advanced, is, according to government figures, the loneliness capital of Europe.

There are several possible reasons for the atomisation now suffered by the supremely social mammal. Work, which used to bring us together, now disperses us: many people have neither fixed workplaces nor regular colleagues and regular hours. Our leisure time has undergone a similar transformation: cinema replaced by television, sport by computer games, time with friends by time on Facebook.

Social media seems to cut both ways: it brings us together and sets us apart. It helps us to stay in touch, but also cultivates a tendency that surely enhances other people’s sense of isolation: a determination to persuade your followers that you’re having a great time. FOMO – fear of missing out – seems, at least in my mind, to be closely ­associated with loneliness.

Children’s lives in particular have been transformed: since the 1970s, their unaccompanied home range (in other words, the area they roam without adult supervision) has declined in Britain by almost 90 per cent. Not only does this remove them from contact with the natural world, but it limits their contact with other children. When kids played out on the street or in the woods, they quickly formed their own tribes, learning the social skills that would see them through life.

An ageing population, family and community breakdown, the decline of institutions such as churches and trade unions, the switch from public transport to private, inequality, an alienating ethic of consumerism, the loss of common purpose: all these are likely to contribute to one of the most dangerous epidemics of our time.

Yes, I do mean dangerous. The stress response triggered by loneliness raises blood pressure and impairs the immune system. Loneliness enhances the risk of depression, paranoia, addiction, cognitive decline, dem­entia, heart disease, stroke, viral infection, accidents and suicide. It is as potent a cause of early death as smoking 15 cigarettes a day, and can be twice as deadly as obesity.

Perhaps because we are in thrall to the ideology that helps to cause the problem, we turn to the market to try to solve it. Over the past few weeks, the discovery of a new American profession, the people-walker (taking human beings for walks), has caused a small sensation in the media. In Japan there is a fully fledged market for friendship: you can hire friends by the hour with whom to chat and eat and watch TV; or, more disturbingly, to pose for pictures that you can post on social media. They are rented as mourners at funerals and guests at weddings. A recent article describes how a fake friend was used to replace a sister with whom the bride had fallen out. What would the bride’s mother make of it? No problem: she had been rented, too. In September we learned that similar customs have been followed in Britain for some time: an early foray into business for the Home Secretary, Amber Rudd, involved offering to lease her posh friends to underpopulated weddings.



My own experience fits the current pattern: the high incidence of loneliness suffered by people between the ages of 18 and 34. I have sometimes been lonely before and after that period, but it was during those years that I was most afflicted. The worst episode struck when I returned to Britain after six years working in West Papua, Brazil and East Africa. In those parts I sometimes felt like a ghost, drifting through societies to which I did not belong. I was often socially isolated, but I seldom felt lonely, perhaps because the issues I was investigating were so absorbing and the work so frightening that I was swept along by adrenalin and a sense of purpose.

When I came home, however, I fell into a mineshaft. My university friends, with their proper jobs, expensive mortgages and settled, prematurely aged lives, had become incomprehensible to me, and the life I had been leading seemed incomprehensible to everyone. Though feeling like a ghost abroad was in some ways liberating – a psychic decluttering that permitted an intense process of discovery – feeling like a ghost at home was terrifying. I existed, people acknowledged me, greeted me cordially, but I just could not connect. Wherever I went, I heard my own voice bouncing back at me.

Eventually I made new friends. But I still feel scarred by that time, and fearful that such desolation may recur, particularly in old age. These days, my loneliest moments come immediately after I’ve given a talk, when I’m surrounded by people congratulating me or asking questions. I often experience a falling sensation: their voices seem to recede above my head. I think it arises from the nature of the contact: because I can’t speak to anyone for more than a few seconds, it feels like social media brought to life.

The word “sullen” evolved from the Old French solain, which means “lonely”. Loneliness is associated with an enhanced perception of social threat, so one of its paradoxical consequences is a tendency to shut yourself off from strangers. When I was lonely, I felt like lashing out at the society from which I perceived myself excluded, as if the problem lay with other people. To read any comment thread is, I feel, to witness this tendency: you find people who are plainly making efforts to connect, but who do so by insulting and abusing, alienating the rest of the thread with their evident misanthropy. Perhaps some people really are rugged individualists. But others – especially online – appear to use that persona as a rationale for involuntary isolation.

Whatever the reasons might be, it is as if a spell had been cast on us, transforming this ultrasocial species into a population of loners. Like a parasite enhancing the conditions for its own survival, loneliness impedes its own cure by breeding shame and shyness. The work of groups such as Age UK, Mind, Positive Ageing and the Campaign to End Loneliness is life-saving.

When I first wrote about this subject, and the article went viral, several publishers urged me to write a book on the theme. Three years sitting at my desk, studying isolation: what’s the second prize? But I found another way of working on the issue, a way that engages me with others, rather than removing me. With the brilliant musician Ewan McLennan, I have written a concept album (I wrote the first draft of the lyrics; he refined them and wrote the music). Our aim is to use it to help break the spell, with performances of both music and the spoken word designed to bring people together –which, we hope, will end with a party at the nearest pub.

By itself, our work can make only a tiny contribution to addressing the epidemic. But I hope that, both by helping people to acknowledge it and by using the power of music to create common sentiment, we can at least begin to identify the barriers that separate us from others, and to remember that we are not the selfish, ruthless beings we are told we are.

“Breaking the Spell of Loneliness” by Ewan McLennan and George Monbiot is out now. For a full list of forthcoming gigs visit:

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood