Giles Fraser: It’s the poor what gets the pain

by
05 August 2009

BARCLAYS have just posted huge profits. The first half of this year they made £3 billion. HSBC have made pretty much the same. Big bonuses will inevitably follow. My first reaction is: how bloody dare they? My grown up reaction: good, for failing banks are in nobody’s interest.

Yet first reactions are important. Healthy banks are so vital to the world’s economy that they are bailed out when they fail. To be fair, Barclays and HSBC have not received public money. But the truth is they would not be in a position to make these profits if governments had not pumped billions into the economy and mortgaged our futures for the next generation.

So losses are everybody’s problem, and yet profits make Porsches for the few. This is not right. And everybody knows it. This is why politicians have been keen to come up with some new formula to assuage public anger. Take the job of regulation away from the FSA and give it to the Bank of England, say some. Pay the regulators more. Make sure the banks have a more conservative asset-to-debt ratio.

This is all very well, but it does not quite seem enough. Lord Myners, the Minister for the City, suggested that those like Sir Fred Goodwin from Royal Bank of Scotland, that have taken huge payouts for making poor decisions, ought to atone for their failure with some public-spirited community service. That may indeed be good for Sir Fred’s soul, but how about something a bit more systemic and radical?

The London Citizens organisation has a few ideas. What about a bank issuing a credit card with a ten-per- cent cap on interest rates? What about making sure that the Corporation of the City of London pays its employees a living wage, and makes sure that it gives out contracts only to firms that themselves pay a living wage — that is, £7.50 an hour?

Maybe these ideas would work, maybe not. But it seems that this is the sort of thing that we ought to be thinking about, the level of ambition that is required in order to offer some payback for the financial disaster that the bankers have brought upon us.

Next year, there will be a new Government. Everyone agrees that it will have to bring in huge cuts in public services to pay back the mountain of debt the financial world has got us in to. And you can be sure that it will not be the Porsche-owners who will suffer.

Yes, we need a thriving economy to make the money to pay the taxes to pay off the debt. But there is zero justice in cutting services that poorer people rely on — especially when it is the rich who have got us into all this mess in the first place.

The Revd Dr Giles Fraser will be Canon Chancellor of St Paul’s Cathedral and Director of the St Paul’s Institute from mid-September.

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