The unsqueezed top: how bankers' pay has already returned to its peak

The new report from the Parliamentary Commission on Banking Standards busts the myth that pay has fallen since the crash.

One of the many myths busted by today's report from the Parliamentary Commission on Banking Standards is that bankers' pay has fallen significantly since the crash. In his testimony to the inquiry, George Osborne noted estimates that the total City bonus pool fell from from £11.5bn in 2006 to £1.5bn in 2013, while Anthony Browne, the head of the British Bankers Association, pointed out that since 2007, cash bonuses are down 77 per cent and the total bonus pool has more than halved.

But what neither mentioned is that bankers have compensated themselves by simply claiming higher basic salaries. As the report notes, total remuneration across RBS, Lloyds, HSBC and Barclays has remained relatively stable. Indeed, since staff numbers have fallen significantly, per-capita remuneration has actually increased. As the graph below shows, pay at most banks has already returned to or exceeded its pre-crisis level. 

The report rightly goes on to argue: 

Public anger about high pay in banking should not be dismissed as petty jealousy or ignorance of the operation of the free market. Rewards have been paid for failure. They are unjustified. Although the banks and those who speak for them are keen to present evidence that bonuses have fallen, fixed pay has risen, offsetting some of the effect of this fall. The result is that overall levels of remuneration in banking have largely been maintained. Aggregate pay levels of senior bankers have also been unjustified. Given the performance of the banks, these levels of pay have produced excessive costs. Indeed, at a time of pay restraint in the public and private sectors, they will raise significant anger amongst taxpayers who have been required to subsidise these banks. These elevated levels of remuneration are particularly unacceptable when banks are complaining of an inability to lend owing to the need to preserve capital and are also attempting to justify rises in charges for consumers.
But while the bankers have already recovered all the losses from the crisis, average household incomes are not expected to return to their pre-recession level until 2023 (£22,000 in real terms). Another timely reminder, then, that we're not "all in this together". 
Total pay at RBS and the other three main banks has already returned to its pre-recession peak. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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This election is about Brexit - don't kid yourself otherwise

The phrase "taking back control" will come under scrutiny like never before. 

Politicians always say that general elections are important. Usually they say they are “the most important for a generation”. But this time, when they say that they are right.

This election is about power, and about Brexit. It is about the right to negotiate Britain’s relationship with the European Union, and to try to shape our relationship with the rest of the world.

But it is also about the right to try to shape our country’s future at home. Because the way Britain works right now is simply not accepted by millions of people. That is the lesson we all should have learnt from last year's referendum.

The message in the referendum was clear enough: British citizens wanted to "take back control". But the meaning has been lost in interpretation. It has become a caricature of itself.

The Brexit vote has been taken to mean that we are a nation obsessed with repatriating powers from Brussels and keeping immigrants out. And yes, it's true that these are the elements of control which many people most readily turn to when asked. Do a quick, surface-level canvass of voters, and you may well take away that message ­– and that message only.

But keep listening, and you will hear something else. You will hear people yearning to gain some purchase on the places where they live, and the forces which shape their lives. You will hear people desperately seeking some way of taking control over the things that matter to them – their work, their homes and the prospects for the people they love.

Even among those who voted Remain last year, almost half think big business and banks have too much control over them. And at least three-quarters of all voters feel they have little or no control over Westminster, their local council, public services, even their own neighbourhood. When faced with that level of malaise, you have to question whether Brexit will deliver the control which people so clearly want.

The dominant narrative would have us believe people are delighted that our long-held protections – in the workplace, in the market, of the air that we breathe – are all up for barter through Brexit. Anything for the parody of control offered by leaving the European Union. In reality, we cherish these rights. The control we seek does not involve throwing them away.

We want real control. That means building power in our workplaces, where new technology is combining with the old power of capital to leave ever more people at the mercy of forces beyond their control. It means greater influence over where we get to live, in the face of a vicious housing market which continues to deny so many of us a decent, affordable place to live.

 It means taking control in our local communities, which are so often overlooked by top-down efforts at regeneration. It means taking control of our essential services like energy, rather than allowing six giant companies to dictate terms to everyone. And it means taking control of our financial system, so that banks can start to serve the public interest and not just their own.

This election is about Brexit. Anyone who pretends otherwise just isn't paying attention. But ask people what they really mean when they say they want control, and you may be surprised by the answers you hear back.

Marc Stears is the chief executive of the New Economics Foundation

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