Time to refocus on the Banks

And the (U-)Turner prize goes to…

Tracey Emin - My Bed 1998

Lansley’s ill-thought plans for the NHS were put on hold today. My brain, sheltered as it is by a tin-foil hat, instantly thought: interesting timing; shelving the plans until just after the local elections (with every indicator showing the LibDems were in for a panning). But let us not be cynical. Let us believe that this, in fact, foreshadows a real change in policy; That it is part of the growing catalogue of government U-turns – on the sale of forests, on school milk, on supplying arms to Libyan rebels, on EMAs.

So many policies have been turned upside-down that the coalition’s agenda is beginning to look like Tracy Emin’s bedroom.

These concessions are bound to (or perhaps designed to) make all that fought on these issues feel a sense of achievement. And quite rightly so. But with them comes a danger of dilution of resolve and complacency. All the while, the primary reason we are in this mess – the reckless behaviour and impenetrable stupidity of the financial sector – is not being adequately addressed.

The Office of National Statistics has recently added the assets and liabilities of the bailed-out banks to the state’s finances. This has added £1.3 trillion to our National Debt. Let me repeat that. The direct cost of the bail-out of the sector to the UK taxpayer is £1.3 trillion. That is close to 100% of GDP.

And yet everything in the current government’s agenda is there to facilitate a similar disaster happening again. The rise in household debt, first highlighted on this blog, will benefit financial institutions. The plunging of future students into debt, will benefit financial institutions. The inexorable creep towards private insurance and private pension, will benefit the financial institutions. The cuts in corporation tax. The under-reported shocking changes in tax regime which will turn this country into a tax haven. The refusal to regulate the appalling practice of speculating and hoarding in food securities, which causes poverty, civil strife and death (and is directly related to the price of crude oil).

What are we doing to avoid another £1.3 trillion being added to our tax bill in one or three or ten year’s time? Are we regulating the finance industry? Far from it. David Cameron instead describes regulation as “The Enemy of Enterprise” and argues for less and less of it. The bankers still pay themselves huge bonuses. They still wave tenners at nurses marching for the NHS. They are still dominated by greed and immune to the effects of their incompetence. And we are being told to borrow more from them; to save more with them; to stop bashing them and help them rebuild the Big Society.

Meanwhile the popularity of sub-prime bonds, the main culprit of the 2008 bubble of excrement which erupted over our heads, is on the rise again.

The government’s scare-mongering rhetoric makes superficial sense. Superficial. Let us take their household analogy (a reprise of the Thatcherite housewife nonsense). They say, if you owed a huge amount and had more money going out than coming in you’d have to cut costs, right? You should tell your daughter: “Sorry. No money for university. Have an apprenticeship instead.” You should tell your son “Sorry. No money for music lessons. Go hang out in the street, instead.” You should tell your nan: “Sorry. No money for a hip-replacement. Get on your mobility scooter and go find work.” Well, no.

Let’s expand the analogy. What if a massive proportion of the money you owe, was a loan to the Lloyds, next door, in 2008 when they were having a tough time, because of an unwise investment? The Lloyds are doing very well now. They are building an extension with a jacuzzi. Maybe you should ask for some of your money back. Or all of it.

The Lloyds and You

We are told the problem is with benefit-scroungers. I have only claimed unemployment once in my life – for six months after law school, while I was looking for work. I, too, was bailed out by the state. When I found work, I was put on emergency tax until I repaid it. I was not given tax breaks. Aren’t Banks the biggest benefit scrounger of them all?

So, let not these partial victories obscure the facts. The Banks of the financial river burst in 2008. Everything was swept in its path – houses, businesses, hospitals, lives. Untold human misery. The reason we find ourselves knee-deep in mud is because there is something terribly, fundamentally, structurally wrong in the way we idolise and kowtow to the square mile. Should our government not be giving its undivided attention to building better flood defences, instead of making us all flush less? Time to refocus.