“No apologies. No restraint. No shame,” says the Independent. “Super-rich bank boss Diamond defiant,” says the Daily Express. And the Daily Mail’s comment column on his appearance before MPs is titled: “A victory for greed that imperils us all”.
Those headlines might make uncomfortable reading for some of us but Mr Diamond is clearly made from sterner stuff, showing, perhaps, how he has achieved what is estimated to be a £100 million fortune and multi-million pound annual pay package.
He’s made a remarkable success of his career and that’s to be admired. But the man or woman in the street, who may have lost their job, their home or wonders what the future holds for them financially, thanks to the consequences of some risky decision-making by the banks, may find his comments a little hard to swallow.
Mr Diamond told MPs: “The biggest issue is how do we put some of the blame game behind us? There was a period of remorse and apology for banks – that period needs to be over.”
There are some who may be thinking that period should never be over: that the misery and economic uncertainty of the last few years should be a reminder set in the stone for the banks that they need to do better by their customers.
It’s a lesson that the taxpayer-owned Royal Bank of Scotland and its NatWest subsidiary do not yet seem to have learned. Yesterday, the Financial Services Authority fined them £2.8 million for failing to deal properly with customers’ routine complaints.
At the same time, there have been reports that RBS's chief executive, Stephen Hester, is to get a substantial bonus for his work in 2010. Mr Diamond’s own response on his bonus was to say: "I haven't been offered a bonus yet…I would discuss [waiving] it with my family."
At a time when it would seem appropriate for the banks to show some sensitivity and understanding towards their customers and the country as a whole, as they seek to rebuild battered reputations, many will be thinking that not much has, in fact, changed in their approach. And if not much is changing, what’s to stop the turmoil of recent years happening again?
Perhaps they would agree with John Mann, the Labour MP for Bassetlaw, as he responded to Mr Diamond: “You are in denial about the taxpayers' support for you; denying a lack of competition in the industry; you're denying customer satisfaction; you're denying the lack of support for small businesses... the emperor is wearing no clothes."
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( 3 / 178 )As the British Chambers of Commerce (BCC) today releases its latest Quarterly Economic Survey, one area in which both manufacturing and services – a sector where weaknesses elsewhere could have “adverse consequences”, the BCC warns – are doing well is exports.
Overseas sales and orders rose during the last quarter, reaching their strongest level since Q4 1994 for manufacturing while the services sector figures suggest exports returning to levels not seen since before the recession in 2007.
So it seems timely that Lord Green today takes up his new post as Trade and Investment Minister. The former HSBC group chairman will be responsible for ensuring delivery of a cross-government trade strategy – to be presented as a White Paper in the spring – as well as attracting international investment.
Lord Green says he is looking forward to “supporting businesses of all kinds, large or small, innovative or traditional, in goods or in services" as they explore the opportunities offered by international markets.
He also says the UK must be positioned as “the most hospitable and welcoming destination for productive international investment.”
Our economy at home is intrinsically linked to trade and investment. Last year, exports represented more than a quarter of our GDP – contributing to the UK’s current status as the world’s sixth largest exporter – while inward investment created 94,000 UK jobs.
Yesterday, British and Chinese companies signed deals worth a total of £2.6 billion, highlighting just how crucial overseas markets – both developed and developing – are to our economic health.
As is traditional when taking on a new job, Lord Green says this is an “exciting and challenging” time to join the government and few would disagree. British businesses will be watching with interest to see how he responds to the challenge of making sure that trade and investment play a key role in driving the UK economy’s growth.
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( 3 / 181 )The coalition government has made it pretty clear that it is looking to the private sector to drive job creation over the coming months and years so today’s meeting between the bosses of some of Britain’s biggest firms and David Cameron is a chance to highlight their plans for doing just that.
And there’s good news on the agenda. Big names pledging to create jobs include supermarket chain Morrisons, which says it will create 6,000 new jobs in 2011, John Lewis and Microsoft, with 4,000 each and gas company Centrica, with 2,600.
That kind of news must be music to the ears of Mr Cameron but as he acknowledged last week, in a speech on economic growth, it’s what he called “small, innovative companies” that hold a lot of the potential for growth.
“Over and over again,” he said, “studies show that around one in 20 companies – the small, high-growth firms – are responsible for half of new job creation.”
And he said the coalition government was “laying out the red carpet” for start-ups and small firms, outlining steps including the New Enterprise Allowance, to help unemployed people start their own businesses, and a request to the Department for Communities and Local Government to reform planning laws to make it easier to get what he described as “wealth-creating projects” off the ground.
Mr Cameron also highlighted the government’s Growth Review and the 2011 Budget in March as tools to “look systematically at all those things that we need to help start-ups and small business expansion”.
Big firms with their thousands of new jobs may grab the headlines. But it’s Britain’s millions of entrepreneurs and small businesses, steadily grafting away – creating a couple of jobs here and a few jobs there – that, as Mr Cameron points out, underpin the nation’s job creation. And they will be looking for all the help they can get from the coalition.
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( 3 / 179 )Hopes that bank lending could be starting to return to normal appear to have been dashed after lenders told the Bank of England that the so-called ‘Basel III’ regulations on the amount of capital they must set aside to cover unforeseen events was hindering their ability to offer credit.
Coming on the same day that the EU has called for even more sweeping powers including the ability to seize failing banks, sack board members and impose haircuts on senior bank debt, this is an issue that appears no nearer a resolution.
Policymakers are essentially confronting two competing demands – if the UK economy is to return to some sort of normality, businesses and individuals must be able to borrow at reasonable levels, but governments are understandably keen to prevent the sort of irresponsible lending that contributed to the recent global economic downturn.
The Bank of England’s quarterly credit conditions survey revealed that the amount of capital available for lending had been ‘tighter’ since the Basel announcement in September, with lenders commenting that the rules would constrain net lending in the months and years ahead.
Banks also indicated continued difficulty in getting existing risk off their books amid weak demand in the debt markets.
Meanwhile the EU’s proposals for a new regulatory regime – to be in place by 2014 – are intended to ensure banks would in future be able to fail without endangering the wider economy but the prospect of additional regulation on this scale may well provide a further disincentive for banks to lend.
While the authorities’ moves to prevent reckless behaviour by the banks is understandable, they must ensure, as much as possible, that the small businesses and individuals – who did little to cause the crisis – are not the ones to suffer most.
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( 2.9 / 194 )There’s gloomy news on the pay front this morning as new research suggests that wage rises, for those fortunate enough to have them, will fail to keep pace with inflation over the coming year.
The research, by Incomes Data Services (IDS), indicates that November saw typical private sector pay awards of 2.2 per cent, slightly up on the two per cent achieved during most of 2010. And IDS suggests that average private sector pay may increase by three per cent in 2011.
At least things seem to be heading in the right direction, but the reality is that the Retail Prices Index (RPI) stood at 4.7 per cent in the year to November, leaving private sector pay deals trailing inflation. And there’s little comfort to be had when measuring pay against the Consumer Prices Index, the government’s target measure for inflation, which stood at 3.3 per cent in November.
Public sector workers, who are being hit hard by government action to cut the deficit, are faring even less well. According to IDS, typical public sector pay rose by just 0.75 per cent in 2010 and this year any increases will be lower.
With those in the know expecting RPI to stay above four per cent in 2011, both private and public sector employees are likely to see the value of their earnings continue to decline.
This week’s hike in VAT to 20 per cent is another blow and yesterday the United Nation’s Food and Agriculture Organisation reported that global food inflation hit a record high last month, with a warning that it would be “foolish” to assume it was at its peak.
So it looks as though we’re all in for another round of belt-tightening in 2011, although it’s interesting to note that while Mothercare and Clinton Cards today warned of reduced profits, after severe weather hit business at the end of 2010, Majestic Wine saw like-for-like sales grow by almost four per cent in the nine weeks to 3 January. Whether that’s because we’re deciding to eat, drink and be merry or to drown our sorrows is up for debate.
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