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19 July 2010

Banks, Balls and those cuts

When will bankers pick up the bill for the financial crisis and the recession that they caused?

By Mehdi Hasan

Two headlines from the front page of the Guardian/Observer website over the weekend caught my eye:

Public sector cuts wipe £1bn off building firms’ stock market value

and

City banks squirrel away £5bn to pay for staff bonuses

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Notice any glaring contradictions there? And who says that public-sector cuts are all about “bloat” and “inefficiency” in the state sector, and have no impact on the private sector? Tell that to the folks on the board of Taylor Wimpey, which has lost 30 per cent of its value over the past two months.

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It is outrageous — OUTRAGEOUS! — for RBS, Barclays et al to set aside roughly a third of their income for bankers’ pay and bonuses. Whatever happened to us all being “in this together”? Labour leadership candidates are right to urge this coalition government to extend the bankers’ bonus tax into the next financial year. It’s just a shame that the last Labour chancellor — Alistair Darling — went out of his way to make it a “one-off”.

The fact is that both the public sector and private-sector companies such as Taylor Wimpey are paying the price for the sins of a reckless, irresponsible and greedy financial sector.

By the way, on the subject of Labour leadership candidates, have you read Ed Balls’s comment piece in today’s Guardian? It is a passionate, informed and well-argued riposte to those on the right, and in the centre, who are rushing to cut the deficit without stopping to learn the lessons of history (and is entitled “Don’t repeat the 30s folly”).

My favourite bit?

Yet there are Labour voices who believe our credibility depends on hitching ourselves to the coalition’s handcart. That is wrong. I believe this risks condemning Britain to a decade of deflation, unemployment and social division.

There is an alternative. Like Keynes and Lloyd George, it is Labour’s responsibility to set it out. It must be a clear plan for growth, a more sensible timetable for deficit reduction, and a robust explanation of why that will better support our economy and public finances.

More of this, please.

In terms of attacking and opposing the coalition and setting out an alternative to Con-Dem cuts, I think even the Miliband brothers would agree that Balls has dominated the party’s leadership election so far. Indeed, the shadow education secretary’s campaign team will be delighted by this passing remark in Julian Glover’s column in the same newspaper:

This battle is real. Ed Balls is doing well, ripping into Michael Gove and VAT. Conservative theories as to which Labour leader would cause them most trouble have been revised as a result.