Angela Tilby: The shadow behind the election

16 June 2017

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“Catastrophic”: Fred Goodwin, the former chief executive of the Royal Bank of Scotland

“Catastrophic”: Fred Goodwin, the former chief executive of the Royal Bank of Scotland

DAYS before the General Election came the news that Fred Goodwin, “Fred the Shred”, was unlikely to face questioning in court over his catastrophic leadership of the Royal Bank of Scotland.

Investors in the doomed bank agreed to accept an offer worth less than half the value of the shares that they say that they were misled into buying nine years ago. Their logic was that to continue to pursue adequate compensation could lead only to a lengthy, and possibly frui­tless, court battle.

Mr Goodwin’s escape from judi­cial interrogation would have no doubt made more impact were it not for the election. But the item, al­­though barely reported, illumin­ates the background to the political tur­bulence that we are now in.

Neither of the two main parties mentioned the enormous cost to taxpayers of bailing out the banks in 2008. Yet this was the invisible shadow behind the election campaign, just as it was behind last year’s EU referendum and the 2015 General Election.

The difference is that those cam­paigns took place against a back­ground of rising wages, a sense that the economy was on its way to recovery. But no more. Brexit un­­certainty has kicked us into touch, and it now seems likely that we will get steadily poorer rather than more prosperous. Our Euro­pean neigh­bours have over­taken us: Germany, Spain, and France, for example, all had higher growth rates than the UK during the first quarter of 2017.

Meanwhile, the deficit is all too real. We see its impact daily in the parlous state of the NHS, slashed schools budgets, and cuts to armed services and the police. People are rightly fed up with austerity, but the Tories offered no relief, and the Labour manifesto was written in fantasy land, conjuring £50 billion out of nowhere.

No one has been held truly ac­­count­able for the banking crisis; no real contrition has been shown. Nor have the banks changed their be­­­­haviour much, and some financial experts predict a second disaster soon. No one has really attempted to address the breathtaking dishonesty and greed that brought us all to the edge in 2008. If banks are too big to fail, they are also too protected to be held accountable.

Surely it is obvious that at least some of the money that would have been available in recent years for public services has been poured into keep­ing banks afloat after their irresponsible directors gambled away our future. One wonders if it would really have been worse if the American Central Reserve had not stepped in to save Lehman Brothers at the start of the crisis, or if we had let RBS go to the wall. There may have been a meltdown then. But the worst may be yet to come.

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