Tuesday 12 February 2013

Everything that is wrong with banking

Is encapsulated by Sir Philip Hampton, the chairman of RBS, who thinks that Stephen Hester should still get his bonus, despite presiding over the criminal activity involved in Libor fixing. Stephen Hester thinks so too. He should be thinking he is lucky he is still in a job. But, despite the RBS being one of the banks that put us in the economic position we are now, despite it having to be rescued by the taxpayer - that's you and me - despite it still, four years on, being 81% owned by the taxpayer, bankers haven't changed a bit. The culture is still the same: salaries as big as possible, bonuses as big as possible, responsibility as little as possible, screw the customers, the taxpayer will pick up the bill.

Hester's justification is that his performance should be looked at in the round - his success at making RBS stable over the last four years. And Hampton says Hester's basic salary is modest by comparison with others in the banking sector. (All that says is that other bankers are even more brazen than Hester.) For a start, I don't accept that logic. When something as massive as Libor fixing happens, it doesn't matter how good the boss is. Either the boss knew nothing, in which case he is singularly stupid, or he knew something, in which case  he must pay the price. But the banking world still does not work by the same logic as the rest of the world. Hester must be paid. Apparently because of the job he has done to keep RBS afloat. I suggest that his performance over the last four years has been nothing out of the ordinary. RBS is, and was, a decent bank. It had all the structures and the expertise in place, it had a very good customer base, and it was and is working in a market that is not all that competitive for big banks. All he had to do was simple things - readjust the balance sheet, make sure people didn't take such stupid risks, fire people who had done wrong (failed on that one). It does not take a genius to do these things. Any competent manager could have done that. Some of the management students I am teaching at the moment could have done that. Judged by that standard, Hester would struggle to justify his £1.2 million salary, let alone his bonus. But Hester is not judged by that standard. That is what is wrong with banking.

Everything that is wrong with privatisation

You remember the G4S Olympics shambles. Private company contracted to do security, fails to understand the scale of the job required, fails to budget sufficiently, fails to find enough staff with the minimum qualifications to meet even their own minimal standards, has to be rescued by the army at public expense. That one.

A deal is done today whereby G4S can walk away having "reduced" the cost to the taxpayer. No wonder Nick Buckles is pleased. He is G4S's boss, remember. He was boss at the time of the cock up, and he is still the boss. He shouldn't be the boss, but he still is because G4S have been able to come out of this still standing. When a private firm cocks up, it should pay the price, the full price. Instead of which it is allowed to walk away with a "reduced" cost to the taxpayer. I don't want to see a reduced cost, I want to see zero cost to the customer for G4S's shambles. I want to see the entire cost borne by the shareholders and the managers, not by me, and people poorer than me. And a lot poorer than Nick Buckles's reported £800,000 salary (that's before bonuses).

Friday 1 February 2013

A good week for Norman Baker

Norman Baker has had a good week. Two announcements about one of his first loves – sustainable transport. Technically, the one about trains wasn't his to make, but he supported the announcement by Simon Burns with his own enthusiasm. (There are respectable criticisms of the whole HS2 project from the sustainability point of view. In my view the whole idea became much better once it became clear that the line would run beyond Birmingham. And one of the most promoted ideas - that you can get bodies from London to Birmingham quicker - is, in my view, one of the weaker arguments in its favour, but that's for another post.) And then there was the announcement about funding to promote cycling - £62 million investment bringing the total announced over the last twelve months to £107 million. These are two of the most noticeable achievements of a steadily successful time at the Dept of Transport. I have to declare an interest – see below – but I believe that Norman can take quiet satisfaction from his time in office, putting Liberal Democrat principles and his personal priorities into action. These include improving local transport; expanding and improving the rail network; making transport more accessible; managing, improving and investing in the road network; and reducing greenhouse gases and other emissions from transport.

Promotion to office in government has deprived Parliament of one of its most effective practitioners at holding government to account. Labour has many fine performers but none, in my view, have the forensic tenacity that Norman displayed while in opposition. Arguably Parliament is the poorer for that. The compensation is a minister who is doing a good job at the complex art of governing.

My interest: I live in Norman's constituency, campaign for him and update his website. I do, however, continuously and forcefully make clear to him my dismay at the government's repugnant treatment of disabled people on benefits (see elsewhere in this blog), to the extent that the sight of an email from me sends a tremor down his spine. Not many people have that effect on him.