Bonuses? For this lot? You have to be joking. It is mind-blowing. It is outrageous. It is sick. Since I have now been officially designated by the BBC as the last politician willing to say anything in favour of the financial services industry and its practitioners, I hope my friends in the City will not mind if I say that it is unbelievable – totally and utterly unbelievable – that banks in receipt of billions of pounds of taxpayers’ money should be using some of that money to “reward” their star performers.
By their greed and folly they have helped to bring their ancient institutions to their knees. They have helped to trigger a bankogenic recession that is now rippling out with appalling consequences through the wider economy. They have come so close to causing a complete financial meltdown that it was necessary to bail them out with £37 billion of cash from the hard-pressed taxpayer. And these bankers now have the cheek, the epic and obscene cheek, to say that at least some of that money – that taxpayers’ money! – should be used to “incentivise” the former masters of the universe. Incentivise them to do what? Reward them for what? You might as well give Lord Cardigan a bonus for the Charge of the Light Brigade.
If these people have an ounce of sense or decency they should either forgo the dosh or give it to charity. This money is not meant to go on more monogrammed shirts or Range Rover Vogues; it is not intended to stimulate the economy by allowing bankers to buy more grouse moors. It is there to help the banks to get credit flowing again to the hundreds of firms that are either going bust or on the verge of going bust through lack of liquidity.
If the Royal Bank of Scotland – now 68 per cent owned by the Government – does not understand that its position is irrevocably changed, and if its senior team continues to think that it is OK to claim great spooling-zeroed bonuses, then they risk provoking a revolt by the taxpayer, and quite right, too.
Please don’t get me wrong. It’s not the paypackets themselves that I object to. I don’t mind if ace bankers haul down sackfuls of loot, any more than I resent the earnings of ace footballers. What sticks in the craw is the fact that this is taxpayers’ money – and the bankers are by no means alone in arousing resentment.
As the recession deepens, so does the divide between those who are paid by private companies, and those who are paid by the state, and nowhere is the division starker than in the matter of pensions. A decade or so ago, before Gordon Brown began his reshaping of the economy, people went to work in the public sector on the understanding that they would probably be paid less than their counterparts in the private sector. But they were fortified by the knowledge that they were serving their country or their community, and that their jobs and pensions were more secure.
After 10 years of Labour, those assumptions, and that essential symmetry, have been abolished. Not only has the public sector been so massively swollen that some parts of the North East are run on more or less Soviet lines, with well over 60 per cent of the workforce employed by the state. There has been a complete transformation in the relationship between private and public sector reward.
The Prime Minister’s great pensions raid made it all but impossible for private sector companies to keep up their final salary pension schemes, so that most private sector employees are finding their retirement looking ever leaner, while the state sector has been miraculously insulated.
It is incredible but true that the average public sector wage is now higher than the average private sector wage; and public sector pensioners can still generally expect a final salary pension scheme – and these can be very generous indeed. In local government, for instance, you can expect to be awarded one sixtieth of your final salary for every year of service. So if you are a chief executive or other senior official, on a salary of more than £200,000, and you have worked for 30 years – well, you do the maths.
It is a very generous deal, and speaking as a former MP and current Mayor, I hesitate to knock it, and I only do so because it is unsustainable. With firms now laying off staff in their thousands, with unemployment apparently set to hit three million for the first time since the 1980s, it is simply too much to expect council-tax payers to scrimp and save to pay for the pensions of local government’s colossal clerisy, when those pensions are so much more comfortable than anything they could afford themselves.
And the second, and more serious, reason for believing the position to be unsustainable is that these public sector pensions are now, frankly, unaffordable.
It is not just that the markets have fallen, and the funds devalued. Human longevity – and the crackdown on smoking – are demolishing the actuarial calculations on which our pensions are based. Our species, Homo sapiens britannicus, is now living an extra two years every decade, or an extra 12 minutes every hour. That’s why the public pension funds have their great yawning deficits, and we can either cover those deficits with massive tax increases, or else we can reform.
It is time for a grown-up national conversation about the way out of this mess, and I suggest we begin by looking at the way we treat older workers. It is mad and vindictive to tell 65 year olds that they are suddenly surplus to national requirements, that they have no more to contribute. We all know talented men and women who have been pensioned off, protesting bitterly, when their continued employment – perhaps part-time – could have been good for them and for the economy.
We need to think much more flexibly about older workers, and their vast and growing productive power; we need to junk the idea that your career comes to a juddering halt at 65; and we need to recognise that age discrimination is not only insane – it is also unaffordable.
[First published in the Daily Telegraph 10 February 2009 under the heading: “Civil servants are sitting pretty, at your considerable expense.” ]
I agree one hundred percent with this article. The thing that puzzles me is it that the government are so helpless? They seem unable to control the actions of banks and mortgage companies even though flagrantly unfair and irresponible behaviour has wrecked the country?
And there are so many examples even now of banks and mortgage companies ripping off their customers through grossly unfair overcharges, no leeway given when people are in trouble, hounding people and deliberately driving them to ruin. There is no pretence anymore of concealing this behaviour, let alone of trying to help the customer.
Everyone agrees there should have been regulation, but they don’t seem able to regulate now!
Brilliant point about Lord Cardigan, I loved that one!
I’ve made this point before, but in the face of such ineffectual leadership from our government, you can see why movies like THE DARK KNIGHT are so tremendously popular. Conventional justice has failed the people utterly. Is it any wonder that the people of Gotham City turned to a vigilante, who singlehandedly administered the justice they were crying out for? Where is our Batman, where are the Super Heroes who will save us from these dim witted doofuses?
I don’t think there’s anyone who could disagree with this one but perhaps the bonus payee’s themselves.
Banks are private industry. The government should not have set the bar by bailing out the first few who ran themselves into the ground. Why is that these particular organisations have to be rescued by the tax-payer? Why not the local tooling company down the end of our road, or the eversoslightly hippy bread shop at the end of our village? If the first few banks had been allowed to go to the wall, it would have been the wake-up call they so richly – pun intended – needed (though have yet to heed). Any chance that the CEOS of these organisations have some connection to those in Whitehall?
Arnold, exactly but why can nobody do anything? Why have the banks become so powerful that they can do what they like and rip off whom they like with impunity?
There are a small % that are paid hugh bonuses and are the people in control of how the banks have operated. However those that work hard and have achieved their targets should be rewarded, otherwise they will leave the banking industry and the revenue that they generate and taxes that they pay will go to other firms, or even another country. We are also talking billions of £’s in revenue to the government. I also presume that the taxpayer wants its money back with interest, how do think that will be achieved without dynamic traders etc??
In many respects I agree with Boris’s essay. The way the banks have brought the country to its knees is lamentable. With regards to pensions, it’s all very well extending employment age and allowing those over 65 to continue to work if they so desire. Personally I would love to retire tomorrow, however, my personal pension, like, I assume most, is looking pretty sick. Poor lot those who are looking to retire over the next 12 months when they see how their plans have been decimated by stock market collapse and poor fund management. If the government are concerned about the yawning abyss in the public purse to pay state pensions why did they take away the incentives for people to invest in their own? I’m of the firm belief you are only placed on this earth once, I would like to see some of it and enjoy what later years I have been given. I don’t want to work until I fall off the perch!
http://aolsearch.aol.co.uk/aol/search?query=%C2%A34M%20reward%20for%20failure%2C%20Daily%20Mail&invocationType=sb_uk
According to today’s Daily Mail, the real problem is that the government are hamstrung by their own Humans Right Act. “Their own legislation stands in the way of a crackdown on pay and perks this year. Any curbs on already agreed bonuses run the risk of being overturned by the European Court of Human Rights.”
In spite of the grandstanding and huffing and puffing to blow their house down of the Big Bad Wolf, Scots git Gordon, a review of the practice of bonuses is being led by Sir David Walker!
Sir David Walker a former head of investment bank Morgan Stanley Int., won the nickname of Mr. Whitewash after carrying out two more enquiries into city behaviour, because they ended up recommending little or no change!
Oh yes, the Big Bad Wolf is all for show and all the little pigs will continue to grow fat as fat can be!
Well done, Bozza, very sensible. Would you go one step further and help to form a firing squad for these criminals?
Google: BANKERS BONUS IS THEIR HUMAN RIGHT GRAEME WILSON
Well, that article in The Sun today says: Brown’s bid to stop bankers getting billions in bonuses has been derailed by the Human Rights Act which Labour brought in themselves.
Treasury officials last night did admit any attempt to rip-up bankers’ contracts to stop them getting the cash would end up in court.
Legal exprts confirmed any clamp-down on this year payouts would be a breach of the bankers’ human rights. Top City lawyer Ronnie Fox said: “The government could pass a law to change contractual rights to remuneration and bonuses already accured. But there would be a challenge under the Human Rights Act. It would be deemed to be taking people’ property and possessions away, just like pinching somebody’s house.”
A treasury insider said: “There’s no doubt bankers would challenge it in the court as a breach of their human rights.”
Oh, dear. After Brown’s wild pledge “British jobs for British workers!” and now their wildly over-ambitous and immaturely thought “Human Rights Act” – they all are coming back to bite their asses !
Meanwhile, Schools Secretary Ed Balls warned ” Britain is facing an economic crisis WORSE than the Great Depression of the 1930s, which will shape politics for the next 15 years.
Bankers, including Sir Fred of RBS grovelled and humbly apologised, insisting they were all so so sorry. THAT’S NICE. But we would rather you gave us the cash back.
Whilst agreeing with you about the greed and culpability of the senior bankers, I cannot help but compare with some of the elected members of the House of Commons and the appointed members of the Lords.
These individuals are bending the extremely lax rules on members expenses and business links to breaking point. When it comes to greed, some members of Parliament (both houses) can hold their own with the bankers.
I think I’m beginning to warm to you!
Why can’t they overturn the Human Rights Act on the grounds that a bonus should only reward exceptional performance? If the performance is catastrophic and negligent, why doesn’t that nullify the right to a bonus?
Because as things stand, the assumption is, they get a bonus however they perform.
Donna makes a very valid point. Greed has been the underlying issue that has triggered this whole economic catastrophe. An obvious point, but one worth making.
This Labour government’s ambiguous Human Rights Act and their wild Political Correctness Culture are not very well thought and are easily open to abuse :
– In UK, stopping the bankers’ bonuses for their poor performance is a breach of their human rights.
– Calling a school in UK ” a school ” is politically incorrect; it harms students’ emotions. It should be called ” a place for learning “.
– Muslim students should be allowed to have a separate assembly at schools in UK. Making them join all other students at an assembly is not only politically incorrect but also is a breach of their human rights.
– Muslim students should be allowed to wear a Muslim headscarf , a burqa or religious wristbands at schools in UK. Stopping them doing that is a breach of human rights, racism and politically incorrect.
– Removing squatters from empty properties in UK is a breach of their human rights.
– Removing gypsies living on someone else’s land in UK is racism, a breach of their human rights and politically incorrect.
– Deporting or detaining illegal immigrants in UK is a breach of their human rights.
The mind boggles. I remember the times when human rights were only about those poor, defenceless political prisoners in those evil nations. I admire the French government’s no nonsense stance- they ban all religious clothing and fascinators in their places-for-learning. Talking about bankers, Ed Balls let slipped that this recession/ depression would last for 15 YEARS ! Knowing Labour’s habit of lying, you should double that amount. No wonder Jeremy Clarkson called Gordon Brown an ” ONE-EYED-SCOTTISH-IDIOT ” and that ” Brown is very smooth at lying to the British public ! “.
google: HEADTEACHER CALLS SCHOOL A PLACE FOR LEARNING
HEAD QUITS IN MUSLIM ASSEMBLY ROW
And:
– In UK, deporting Muslim/ religious hate-preachers or sending back terror-suspects to the countries of their crimes are racism, a breach of their human rights , according to this Labour government’s well written law.
– Stopping these religious hate-preachers’ and terror-suspects’ social benefits money is also racism and a breach of human rights ( Labour’s law ).
Right now, an illegal Somalian immigrant caught entering UK with a fake passport is suing this Labour government £118,730 for being locked up for 83 days. He says locking him up is a breach of his human rights and racism.
He has been granted legal aid ( taxpayers’ money ). He’s still in the UK , living rent-free in a private flat rented by the council ( taxpayers pay the rent for him ).
Come on though, Labour still have Harriet Harman! Her instinct for the most vital issue is unerring… she wants to stop bankers taking corporate clients to lap dancing clubs.
She is probably hanging round joints like the Eager Beaver, measuring the fabric on the girl’s G strings, to see if it amounts to exploitation. (And she probably thinks the Eager Beaver is a Disney cartoon character).
So when bonuses are overturned across all industries, because it could not just be set for bankers alone – that would be good – get real
I thought this was quite a thought provoking article which needs further debate re. the role and effectiveness of corporate governance in organisations and government.
On the issue of public sector pensions is it not the case that Gordon has actually “robbed” the private pension schemes through the ACT tax legislative changes to temporarily shore up the unsupportable burden of public sector schemes. Nice touch!
I’m sure you will evoke much derision from the public sector hacks and unions on this one but I hope you stick with this issue.
Another case of living beyond our means!!
google: SCOTS COUNCIL TAX FROZEN BUT RATES IN ENGLAND RISE MICHAEL LEA DAILY MAIL THURSDAY FEB 12 2009
Householders in Scotland will have their council tax bills frozen until 2012 in a £210 Million deal funded by British taxpayers.
The Scots already have free eye care, free dental check-ups, free universities, free access to cancer drugs and free care homes for the elderly – all of these free services are not available to British taxpayers but are funded by English taxpayers !
Matthew Elliott, of The Taxpayers’ Alliance, said: ” This is yet another example of how Scotland ( Gordon Brown’s fatherland ) gets away with having fantastic public services that are funded from the pocket of English taxpayers. This is another case of the growing apartheid between England and Scotland.”
Perhaps The Taxpayers Alliance should sue this Labour government for racism and breach of human rights.
Talking about free universities in Scotland. These free universities are only available to Scottish students whose UK passports say they were born in Scotland and all students from other EU member states. English students can not just move to Scotland and enrol for a free university study ( their UK passports say they were born outside Scotland ) even though English taxpayers fund these Scottish free universities.
No wonder lots of students from eastern Europe are studying in these free Scottish universities – in eastern Europe they would have to pay a lot of money for a university place. Clever.
Human Rights? I am 80 years old. Three years ago I was dismissed from my job because I wrote a humerous book, then learned that I had no right to claim Unfair Dismissal because I was over 65.
I have a £75,000 mortgage on a tiny two-bedroom house. A part-time job and part-retirement pension pay the mortgage
and essential expenses. Until this current banking debacle I earned £1200 a year, before tax, on a web-saver account – my life’s savings. That has now been cut to £300 – before tax.
Who cares?
I served in the Army and have paid income tax all of my 65-year working life. I have abided by the law and cheated no one.
Who cares?
Certainly not Gordon Brown and all the recipients of the tax-payers billions.
Stanley
Stanley, I am so indignant on your behalf! They sacked you for writing a humorous book! How could they do that, unless it was about them? You sound like someone this country should be proud of.
Quite, Boris.
So we have this issue; also the issue of MPs’ and Ministers’ expenses; Lords selling their services … 13-year-old children having children effectively sponsored by the state – all of it with apparent impunity !
One question:
Why the f[***] should the rest of us bother to obey the law ? (Seeing as you don’t seem to mind the ‘F’ word)
Justice is failing ordinary people and the damn stupid laws brought in by the Labour Party are strangling what little justice remains.
Nice one, Boris. I think, for once, I agree with everything you say…
I disagree, sure the Banksters have been greedy and exploitative, but they have been allowed to do this by Govt.
Why have they been allowed to do this, because Govt is NOT our Govt, our real Govt is in fact the Banks.
I don’t mean the sacrificial lambs being slaughtered now, I mean the heads of the pyramid.
The Banks have been allowed to fail and collapse because we are in the final stages of an attack on Western democracy, freedom and the free market.
http://uk.youtube.com/watch?v=XRLPG_HplrA
It’s all here :-
http://www.keynesatharvard.org/book/index.html
once again,boris is 100 per cent right.
in times of utter disrespect for society as a whole by bloodsucking,greedy to the point of insanity bankers and speculators,we have someone who says it as he sees it.
good on you boris,thank god for a true blue conservative view of fair play,and a balanced approach to things.
in times of repugnant greed by a few new world order enthusiasts whome think that there collective wealth can overule the freedom of democraticaly minded peoples and there national governments,we still have a common sense approach to there crazy way of thinking.
britain and europe as a whole can lead the world once again
into a brighter place,and put to rest the ideolgy that the corporate elite are bigger than society as a whole.
Something most people seem to overlook is Quality: What we’ve seen recently in the Financial Industry represents the most spectacular Quality Failure. We must not forget many companies in the Financial Sector have been using Lean, or Six Sigma for at least fifteen years. What do these Quality systems have to say about Quality? They claim variation is a measure of Quality – even a performance characteristic such as profit? By no stretch of the imagination can profit variation ever represent Quality? Quality is simply a duty of care …
Given that many so-called Lean, Six Sigma Quality consultants support this distortion is it any surprise that CEO’s want to run very flat organizations – one in which there are few check and balances?
The New World Order for Dummies
http://uk.youtube.com/watch?v=XRLPG_HplrA
Your children Microchipped, this is what Jaqcui smith is building up to.
<a href=”http://uk.youtube.com/watch?v=7nD7dbkkBIA
Sorry about that link Boris, here it is again, the home Secretary’s agenda for our children and grandchildren and…..
http://uk.youtube.com/watch?v=7nD7dbkkBIA
The World is being turned into a Prison Planet.
As part of the system, YOU may be Ok boris, your children may be Ok, but if this becomes reality can you gaurantee that their children will remain free.
http://www.prisonplanet.com