Politics Magazine

Labour Rediscovers Public Ownership: Bad News for RBS

Posted on the 15 January 2014 by Thepoliticalidealist @JackDarrant

Whatever you want to call us: the 99%, the working and middle classes, ordinary people, the proletariat… we’ve been having a tough time over the past 7 or 8 years. We’ve been paying for the near-collapse of the global financial services industry twofold: with the wrecking of our pubic finances to fund hectobillion bailouts, and the pinch that the rest of our economies are suffering. Consequently, it’s our living standards that are falling, our public services that don’t work, our life chances that are being salami sliced.

However, some people aren’t suffering.

Let me quote you one shocking fact: according to an article in the latest edition of Tribune, UK inflation has outstripped the growth in average earnings (at about 2-3% to 1%) on every month except April 2013, when City bonuses and pay rises distorted the national figures. The pay rises of a few thousand overpaid bankers were so vast as to outweigh the below-inflation rises of 40,000,000 workers. The very group of people who drove Britain to the brink are those who aren’t paying for it. This will only come back to haunt the banks.

So when the 82% state-owned Royal Bank of Scotland demanded the government’s consent to its paying its top bankers bonuses of 200% of their ordinary salaries, it got little public sympathy. Under new EU law (which George Osborne is trying to challenge), banks may only pay bonuses of 100% of annual salaries, or 200% with shareholder approval, meaning that the Government can no longer be a passive shareholder. If the Treasury wants Lloyds’ and RBS bankers to receive obscene bonuses, they have to vote for it.

And that’s exactly what the Government intends to do, but for a little political difficulty. The Labour Party is now calling on the Government to vote against any bonuses: a populist policy that could force the Conservative Party’s hand. Labour’s policy is a refreshing change from that of its previous leadership, which insisted on a “hands off” approach to the nation’s shareholdings. A bit of radicalism is what Labour is supposed to be about. Some have condemned the proposal as anti-business. It isn’t. It’s anti-theft.

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