Mervyn King, the governor of the Bank of England, says he is ‘surprised that the degree of public anger has not been greater than it has’. Photograph: Darren Staples/Reuters
When you’ve been going on about something for a while, it is always satisfying to discover that other people agree with you. I have been arguing for the last year that the banks, hedge funds and other titans of the City of London whose gambling got us into this trouble should pay to clean up the mess they caused.
Now, no less a figure than Mervyn King, governor of the Bank of England, has laid the blame for cuts in public services and welfare squarely at the door of the City. “The price of the financial crisis is being borne by people who did absolutely nothing to cause it.”
The evidence supporting him is overwhelming. The International Monetary Fund has warned that British government debt will be 40% higher as a result of the financial crisis. That’s equivalent to a total of £28,000 for every taxpayer in the country.
But King’s subsequent comment that he was “surprised that the degree of public anger has not been greater than it has” suggests that either he had a very high expectation, or that he has misread the public mood.
I’m an ambassador for the Robin Hood Tax campaign, which calls for a tiny tax of just 0.05% on every casino-style financial transaction in order to help poor people, reverse public service cuts at home and abroad, and tackle climate change. In this role I’ve seen how people’s sense of fairness has been stretched to the limits by the continued spectacle of huge pay increases and bonuses in big companies while ordinary people suffer. Every time people turn on the television news they are bombarded with stories of job losses, disabled children forced into care, public sector cuts or young people left without a future. Meanwhile one of the country’s leading bankers claims “the time for remorse and apologies needs to be over“. If there has been any remorse it has escaped my notice. Of course people are angry!
Project Merlin, George Osborne’s agreement with the banks last month, was widely ridiculed because people are too angry to accept a backroom deal that does not address the fundamental issue of fairness. Our campaign is supported by Lord Turner, chairman of the Financial Services Authority, along with 250,000 Facebook users and 113 organisations from Oxfam to the Salvation Army. When, last week, I challenged bank chief executives Stephen Hester, Bob Diamond and the others, to visit people at home and abroad hit by the economic crisis, I was inundated with messages of support.
More dramatically, Barclays – which recently announced a £6bn profit and a 20% increase in pay and bonuses – found 40 of its branches occupied by protesters on the day it was revealed that it pays just £100m in tax.
Polls show this anger is felt by supporters of all political parties. A ComRes survey, carried out in January before the UK bonus season, found that 80% of people, including 76% of Conservative voters, want additional taxes on bankers’ bonuses. Polls regularly show majority support for a Robin Hood tax – it could be the most popular tax in history.
Mervyn King is right, though, that this anger has not yet forced politicians to make banks pay their fair share. Perhaps this is unsurprising: many MPs have spent years seeing the excessive profits and bonuses of the City as a sign of economic health. But this does not mean it will not happen. French president Nicolas Sarkozy and German chancellor Angela Merkel have both responded to public anger by promising to go ahead with transaction taxes.
Perhaps the biggest barrier to the UK following suit is the fear, endorsed by many commentators, that a higher tax burden would encourage banks to up sticks and leave. But this doesn’t bear scrutiny. According to the Bank of England, the banks benefit from our taxes and the subsidy afforded them by the government to the tune of £100bn every year. They also benefit from the City’s excellent infrastructure. The idea that they are about to give this up to move to Dubai or the Cayman Islands is incredible, especially when you realise we already have a 0.5% tax on share transactions.
If the public see through banks’ scare tactics, their anger and their desire for justice really will force politicians to act.