Bob Diamond has said that the period for “remorse and apology” for the Banks is over. George Osborne has stated that we can now “draw a line” under the Bankers and move on. But today even Adam Smith is being used against the greed of the Bankers as Banks are being seen as a “conspiracy against the public”.
The whole country is at a crossroads. The coalition government is entering a time of extreme austerity to deal with the deficit. A deficit that got out of control, not due to an over spend by an evil Marxist Labour government but due to an economic orthodoxy followed for 30 years by the right and the left in politics. This was encouraged directly by financial institutions leading to a credit crunch, recession and a slump in tax revenue. (see http://extranea.wordpress.com/2011/02/08/the-truth-about-the-uk-deficit/ )
Those on the right wing and in government call those protesting about the savagery of the cuts as DEFICIT DENIERS. No one is allowed to discuss and protest on behalf of those that will suffer like the disabled; mentally ill; the poor; the elderly; communities; NHS and nearly a million unemployed youths.
Politicians love labels and pithy political statements to caricature an argument and to demonise a group of people so that the public will not listen to the arguments. Like “austerity Britain”; “broken Britain”; “big society”; “the Miliband wagon”; “red ed”; “We are all in this together” and so on, we have heard more slogans in 8 months than we heard in 13 years of Labour. Quite an achievement.
In order to provide good policy decision making, politicians need to understand the issues and evidence and provide solutions to the problems we face.
There have been some good signs recently regarding the direction of David Cameron and the coalition with the U-Turn on the forest bill; welfare reform to try and make work pay and the Treasury paper released which could create a more far reaching regulatory system for the financial sector. (see http://www.bbc.co.uk/blogs/thereporters/robertpeston/ )
Today the deficit deniers in the form of UKUNCUT will be occupying branches of Barclays Bank and turning them into useful public spaces. You could say, contributing to the Big Society.
Those on the right wing will be calling for more laws to control the Unions; how these deficit deniers are living on another planet and how we have to move on from the Banks as a political issue.
The issue of the bankers never seems to go away though. When we feel we have heard everything we could, and when previous jaw dropping moments pass, another one arrives. This time it is thanks to some digging by Chuka Umunna MP. We now have a confirmation of just how much tax Barclays Bank paid in 2009. The total sum of the 28% Corporation Tax paid was . . . er wait for it . . .
This is from a profit made of £11.6bn. Barclays have tried to make out that their entire tax paid was £2bn, but this includes tax paid on behalf of employees and nothing to do with tax on the company itself in corporation tax.
Now, to be fair, it is not a straightforward subject. A company like Barclays is a very large company with many subsidiaries and they have to pay tax in various locations. They are also dealing in a global market competing on a global scale. However, a quick perusal of where the subsidiaries are based and the true picture begins to appear. Within their structure they have 30 subsidiaries in the Isle of Man, 38 in Jersey and 181 in the Cayman Islands, all tax havens. It has also been revealed that only 20% of the tax paid by Banks in 2010 was not through employee contributions.
We live in an amazing world at the moment. Three years ago we could not have imagined that there would be a run on the banks and then the effective nationalisation of Banks throughout the western economies; that the most right wing government in the USA in it’s post war (WWII) history lead by President Bush would nationalise the Banking sector; that a quasi Tory government in Britain would nationalise the very sector that it had courted for the previous 10 years; that keynsian economics would suddenly come to the fore in the USA; and that the all knowing IMF, that is still quoted today by George Osborne as the arbiter of sound macro-economic finance, would produce a report 6 months before the crises stating that the model for economies should be based along the lines of the light touch regulation in the USA and Britain.
Meanwhile, our response to these remarkable events appears to blame those in the lower socio-economic strata’s of society. We are about to reduce the amount we are spending on those with disabilities by 20%. We are told this is a reform and nothing to do with just saving money. We are making people redundant from the public sector who we are told don’t actually do anything. We are cutting the services that those on lower incomes and the elderly rely upon, and we have cut the teaching budget for Universities by 80% and increased the student debt by tripling fees.
We are told if we discuss an alternative we are DEFICIT DENIERS.
But like the forests, sure start and the recent figures spouted by Andrew Landsley on the NHS – the facts do not fit the rhetoric. (see Ben Goldacre’s Bad Science http://www.badscience.net/2011/02/andrew-lansley-and-his-imaginary-evidence/ )
We now know that Barclays and no doubt all the other banking institutions use tax haven territories to deliberately avoid paying tax in this country.
We know that the government is creating more ways for large companies including the Banks to utilise tax loopholes. (see Monbiot http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century )
Like the corrupt MP’s in the expenses scandal, who said it was “within the rules”, the banks also use this excuse. The truth is that our leaders, from which ever party, are in hock to the banks. The banks have to much power over our political parties, and our political leaders have encouraged tax havens in old colonial territories. The Banks use every loophole in the book to prevent them paying a morally acceptable amount in our society.
It is time for the politicians and the Banks to take their head out of the sands and realise that it was not the general public and the “perceived” weakest members of society that got us in this mess. It was not an evil marxist Labour government that got us in this mess, and it was not benefit cheats or the disabled who we are led to believe are no longer disabled that are to blame.
It is the economic orthodoxy, corrupt and out of date political system and the Bankers that are to blame.
The controversy over the Banks will not go away until they pay their way; until banking reform is enacted; until the banks are no longer too big to fail and until our political system cannot be corrupted by the vested interests of the rich.
Bankers and Politicians need to wake up and smell the coffee. If bankers and the rich generally paid their way the cuts would be less severe. This is a genuine debate, not deficit denying or being left wingers. If Bankers do not take their noses out of the trough, no amount of rhetoric about the Big Society will placate the growing discontent throughout our country.