Exodus Of Bankers Is A ‘Price Worth Paying’

(Guardian) – A SENIOR BANK OF ENGLAND OFFICIAL says that bankers moving overseas to avoid the bonus super tax could be a price worth paying to achieve lasting reform of the sector.

Andy Haldane, the bank’s head of financial stability, also said that banks had become too big and was sharply critical of a culture where bankers could take huge risks in the knowledge that the taxpayer would bail them out.

In an interview with the BBC World Service, Haldane said: “Some of the downsides of carrying around a big financial system are now evident to all.

“If some of that were to migrate overseas that would be unfortunate but given the costs of carrying that financial system around, it may be a price worth paying.”

His comments underline the gulf between Threadneedle Street and the City over how to deal with the fallout from the financial crisis.

In the Bank’s financial stability report published today, officials stepped into the row over bonuses by calling for banks to build up their capital rather than making large payments to staff as many are expected to do despite the sector being bailed out by the taxpayer.

Earlier this year the governor, Mervyn King, suggested that the largest banks should be split in two in order to separate the retail part from the high risk investment bank divisions.

Haldane said that the effort to reform the City should not be delayed.

“It’s true that the lobbying effort of the financial sector should not be under-estimated. Equally, the way to beat that back is by appealing to logic and to evidence.

Disputing the argument used by bankers that they need to be big to compete globally, he said: “There is not so much as a scintilla of evidence of bigger being better in banking …. A lot of the noise around that really is rhetoric,” he said.

“So in most industries we do think that bigger and wider delivers a better product for the end user. I think in banking the evidence on that is close to non-existent.”

“And we do know at the same time that bigger certainly isn’t better when the going gets tough. Bigger during this crisis has meant bigger bailouts not better bailouts.”

Haldane also spoke about what he described as a “Doom Loop” where banks take risks knowing that the state would bail out the sector because it was too important to be allowed to fail.

“It’s a loop we’ve been round repeatedly over the last 200 years which is that every time we have one of these events, the public sector has ridden to the rescue, it has written the cheque.

“And that has rather fortified the financial sector to double their bets for next time which means that when next time comes the cheque needs to be that much bigger … It will be a long-run battle.”

Advertisements

Telegraph Wins Award For Expenses Investigation

THE TELEGRAPH MEDIA GROUP has been awarded a prestigious international award for the exposure of the MPs’ expenses scandal.

The Reporters World Award from El Mundo, the Spanish newspaper, was made in recognition of the international impact of the Telegraph’s MPs’ expenses investigation.

The investigation led to the resignation of numerous politicians, including the Speaker of the House of Commons, and dominated the news agenda for weeks.

The award is made in honour of two El Mundo journalists, killed while covering the wars of Iraq and Afghanistan. It will be presented by the King of Spain at a ceremony in November.

A spokesman for El Mundo said: ‘It was simply impossible to find a better candidate for our international journalistic award in 2009 than the team involved in the investigation of the Expenses scandal in The Daily Telegraph. And not only because it was the most eyecatching and relevant series of articles published in the last decade by any European newspaper; but also because it had real consequences for the British citizens and for their politicians.

‘As a result of its revelations, the speaker Martin resigned, the MPs agreed to change their rules, and many of those involved ended up paying the money back to the taxpayer.

‘Every journalist should feel happy about what The Telegraph has done; because it proves that our trade is still alive — and that its preservation is absolutely crucial for society.’

Children Still Living In ‘Dickensian Poverty’

(Reuters) – SOME CHILDREN are living in such poverty that their lives mirror the suffering of those in the ‘times of Dickens,’ a teachers’ union leader says.

Lesley Ward, president of the Association of Teachers and Lecturers (ATL), said some children come from communities with such deprivation that it is incredibly hard for schools to help rectify.

‘There are perfectly healthy children who enter school not yet toilet-trained,’ Ward told a reception in London.

‘Children who cannot dress themselves, children who only know how to eat with a spoon, and have never sat around a table to enjoy a home-cooked family meal. Children who don’t know who will be at home when they get home — if anyone.’

Ward said she knew of one pupil who watched from a classroom window as his father was led away in handcuffs after his house’s front door was kicked down.

‘The reality is that six in 10 poor children live in families where someone works. That’s shocking isn’t it — you go out to work, perhaps two or even three part-time jobs, and you’re still living below the poverty line,’ she said.

‘Life mirroring the times of Dickens.’

She said deprivation caused the problem of ‘poverty of aspiration,’ with parents seeing little value in education; but she rejected the notion that teachers just accepted this.

‘What really makes me bloody mad is the idea that teachers are complacent or resigned about this,’ she said.

‘As a teacher, there is nothing better than seeing your kids succeed.’

Only Rich Britons Can Get Professional Jobs

(Reuters) – ONLY CHILDREN FROM THE RICHEST FAMILIES can enjoy careers in top professions, like law and medicine, because of increasingly impenetrable social barriers, a government-commissioned report said today.

The study, led by former Labour government minister Alan Milburn, said there was a ‘closed shop mentality’ in many professions which excluded young people from low and middle income backgrounds.

‘Frankly there are too many kids out there from average income families who are bright… and who want to go on to get a top professional carer; but haven’t got the right connections, haven’t necessarily gone to the right school, maybe haven’t had the chance to go to university, and that has all got to change,’ Milburn told BBC radio.

The Fair Access to the Professions report said ‘birth not worth’ had become a greater factor in deciding someone’s chances in life and that professions had become increasingly socially exclusive, open to fewer people.

It found 75% of judges, 70% of finance directors and 45% of all top civil servants had been to independent schools, although just 7% of the population were independently educated.

Those who get professional jobs grow up in a family richer than seven in 10 of all British families, the report said.

But Milburn said a large expansion in such jobs in the near future — with up to seven million new professionals needed by 2020 — provided an opportunity for a second wave of social mobility, similar to the situation after World War Two.

The report made some 80 recommendations, including opening internships to a wider pool of people, improving careers advice and making extra-curricular school activities and university degrees more widely available.

There also needed to be a campaign to raise aspirations and, although it rejected a return to academic selection of pupils, the report called for parents to be given the right to choose better schools for their children.

Milburn said efforts by Labour to improve the performance of schools since the party had been in power for the last decade had helped; but more needed to be done.

‘We’ve managed to raise the glass ceiling but in all truth we haven’t broken through it,’ Milburn said.