Our nation needs a thriving financial services sector. The spiritual home of the UK’s banking industry is in the City, but its importance as an employer and engine for economic growth extends throughout the land.
As the City’s MP I regard with dismay the attempts by some in public life to make banks and bankers scapegoats for the recession. We should recognise that many thousands working in this sector have already lost their jobs; others, relatively modestly paid, are fearful for their futures in finance. The great majority of bank employees are caught up in events outside their control or influence and are as bewildered as the rest of us at the collapse in their sector.
This only adds to my disbelief at reports that the directors of RBS and Lloyds Banking Group, entities which survive courtesy of huge taxpayer loans and guarantees, now propose to pay billions of pounds in bonuses to reflect performance over the last year. The public outrage at this news is entirely justifiable. No bank which is in receipt of government bailout funding should be paying bonuses to staff this year. After all 2008 was for RBS, Lloyds and Northern Rock a year of catastrophic, monumental failure. This state of affairs (resulting in eye watering sums of government assistance and guarantees) cannot be compatible with a ‘business as usual’ approach on remuneration. I have sympathy for those hard-working RBS, Lloyds/HBOS and Northern Rock employees operating in profitable divisions, but the notion that they should be ringfenced from the disaster that has befallen their employers is absurd. Ditto those bankers on ‘guaranteed’ bonuses. For them, I am afraid, events since last October mean we are living in a very different world. My view is that any such salary guarantees are inapplicable to those banks reliant on government handouts.
It is high time that senior management in our leading financial institutions woke up to reality. What better case can they possibly provide to opponents of capitalism and free markets than obliviously to take unwarranted financial rewards when as a result of the credit crunch the UK economy finds itself in such dire straits?