David Cameron lurched about the despatch box at this week’s Prime Minister’s questions like a toddler drunk on the power of watching a sibling taking the rap for his crimes. He accused veteran Labour MP Michael Meacher of suffering the psychedelic effects of ‘a night out with Reverend Flowers’, the disgraced, drug taking former Chairman of the Co-op Bank. A quick look at the funding, relationships and patronage of the UK political system reveals: Westminster village is on a perpetual night out with Rev. Flowers.
No one doubts that there are committed, back bench Labour MPs who cling to the original purpose of the party – but we are kidding ourselves if we think the Labour Party machine is servicing those principles anymore. In fact, Cameron might be the only man in Britain who still believes Labour is ‘in hock to the Unions’. Labour made friends with big business, and former Labour cabinet members can be said to have been served very well by these friends ever since.
After opening up much of the nation’s law, policing and justice services to private security companies such as G4S while Home Secretary – former Labour MP John Reid became a Group Consultant for…G4S.
The Bail Out
According to the National Audit Office, The UK National Debt rose by £850bn as a result of the Bank Bailout. This is almost twice the nation’s total annual budget. For this amount, the UK could have funded the entire NHS (£106.7bn a year) for eight years , our whole education system for twenty years (£42bn a year) or provided two hundred years of Job Seekers Allowance (£4.9bn a year).
Labour failed to regulate the banking sector, basking in the glow of the boom times, and when the bust came, they transferred the pain of consequence to the taxpayer.
LIBOR – While the banks were approaching the taxpayer with a begging bowl for this bailout, they were simultaneously rigging the basic rate of interest, in order that they could make profit from debt, whilst pensions and savings suffered losses.
To give you some sense of scale, it is estimated that the rigging of LIBOR saw lost income from its victims of over $850 trillion. This is the total UK state budget for 760 years.
This is not a victimless crime. While some say consumers benefitted from their loans and mortgages being slightly lower due to the LIBOR rate rigging, these small short term gains were outweighed, as simultaneously their pension values were also linked to the same rate, so being devalued. Those with investments and savings (largely linked to the LIBOR rate) also saw massive losses.
Serious questions about the rigging of the LIBOR rate have been around since 2005. But the Labour government, and their circle jerk regulatory system took no action.
PPI – Banks were free to get busy mis-selling Payment Protection Insurance to retail customers for over a decade before they faced any repercussions (none under Labour’s watch). Over 3 million people were affected and stand to claim up to £4.5bn.
PFI stands for Private Finance Initiative. The schemes were initially designed by Tory Chancellor Norman Lamont in 1992 and were rapidly expanded under New Labour. They are touted as a form of Public Private Partnership. The government uses private finance, rather than borrowing in the usual way, to raise funds for projects. Since 1992, our hospitals and schools have been built this way. PFI loans are at least twice the rate of interest of ordinary government loans, and repaid over 25-30 years.
Already, 22 of the 103 NHS trusts to enter PFI are facing financial difficulty due to the exorbitant PFI repayments. Some hospitals are having to handover a fifth of their annual budget on paying for the PFI deal.
Overall, for a capital investment of £54.7bn (that’s how much money we actually borrowed to build stuff), the taxpayer will pay back an astounding £301bn in just twenty five years. Given what we have already seen, many of the 771 PFI projects currently running will bust the budgets of these public services long before then, leaving us with the debt but not the service.
All things considered, a ketamine and coke snorting, rent boy using Reverend with zero business skills being permitted to take over as Chairman of a UK bank and run it into the ground is small beer compared to Labour’s litany of unethical relationships with big business.
The Tories might relish the idea that the former Chairman of a bank with ties to the Labour Party has been caught not only with his pants down, but with his nose full of the white stuff. But is this really safe ground for the Tories?
If it’s bad for the Chairman of a bank to use illegal drugs and pay for sex, how about a Chancellor?
In 1994, future Chancellor George Osborne was photographed at a party, with his arm around a sex worker called Natalie Rowe, sitting at a table full cocaine. In October 2005, Natalie Rowe came forward to release the picture and her story to the press. Rowe sold her story to the Sunday Mirror. However, to the surprise of Rowe and the Mirror, Andy Coulson broke the story in a leader column in the News of the World. Not only that, but the story was spun in a manner entirely sympathetic to Osborne, stating that he was ‘a young man when he found himself in a murky world’. Rowe’s lawyers allege that Coulson stole the story by hacking her phone, and used it to gain leverage with the future chancellor.
And lo, on news of his resignation from the News of the World – Andy Coulson became Director of Communications at Downing Street, despite recently resigning in shame over phone hacking allegations. He was recruited on the recommendation of none other than George Osborne.
The Tories are also famed for providing political power and policy to those who fund or provide other support for their party. Here are some notable ‘jobs for the boys’.
After his wave of privatisations in the 1990’s, former PM John Major went on to become European Chairman of private asset management giant the Carlysle Group.
Stephen Green & HSBC
HSBC were found guilty in a court of law of funnelling the proceeds of crime through their books knowingly and deliberately. This was not the act of some rogue trader.
HSBC set up a subsidiary firm with the specific intention of using it to launder the money of Mexican drug barons. It spirited over $7bn of the stuff between 2001 and 2007.
HSBC deliberately concealed transactions between 2001 and 2007 worth $19.7bn which mostly involved Iran. These trades were illegal under US trade restrictions. HSBC Europe and HSBC Middle East repeatedly removed information from transactions to conceal that they were dealings with Iran.
HSBC also pressured its US subsidiary to rekindle its relationship with Saudi Arabia’s Al Rahji banks which was found after 9/11 to have relationships with terrorist organisations.
Finally, HSBC’s US subsidiary happily cashed over £290m in dodgy traveller’s cheques used to launder Russian money without taking due diligence procedures.
Stephen Green, the Chairman of HSBC while all this took place, was appointed Trade Minister by David Cameron and now sits at the heart of UK government. So, when a Labour-friendly Chairman of a Bank buys £300 of coke, Cameron calls for a public inquiry. Yet when a Tory-friendly Chairman of a Bank launders billions of pounds of drug money, he gives him a job.
The owner of retail outlet Arcadia, which owns Topshop, is notorious for his tax avoidance schemes. In 2005, he gave himself the biggest pay cheque in UK history, £1.2bn. However, by putting Arcadia in his wife’s name (who lives in the tax haven of Monaco and hasn’t done a day’s work for the company) and channelling funds through a string of offshore accounts, Green managed to shift £300m out of the hands of the taxman. This money could have paid the full £9,000 a year tuition fees for 32,000 students, or the annual salary of 20,000 nurses. Instead, it sits in Green’s bloated wallet.
Furthermore, despite building a £5bn empire on the back of sweatshop labour – Green refused to sign a pledge to improve safety conditions for Bangladeshi workers after a series of avoidable accidents which left scores dead and injured.
Yet, the Tories appointed this man as their business tsar, leading an ‘efficiency review’ into government spending. Therefore while Green refuses to pay his share into the pot of public money, he is given power to dictate how that public money is spent.
Despite persistent rumours about rate-rigging, and receiving information from several sources that an investigation was required – the UK regulator failed to act until it was forced into action by US regulators in 2012. So why were the Tories so slow to act?
It might be coincidental of course, but some of the Conservative party’s most generous and powerful donors were involved in the scam.
His firm iCap was fined £55m by regulators in the US and UK for LIBOR rate rigging, and three of his employees face up to 30 years in jail if convicted. It is notable that while the US fine stood at £41m, the UK fine was a mere £14m (just 4% of their £330m pre-tax profits in 2008, the height of the rigging). One might suggest this was a decent return on a worthwhile investment.
Cameron has paid £500,000 to appoint Lynton Crosby as the Tory party election strategist. Crosby is Cameron’s political compass, steering the Prime Minister to launch and ditch policies, and gain the party victory in 2015.
Crosby is an Australian strategist who helped John Howard to four elections victories, and was behind Boris Johnson’s successful campaign to gain re-election as London mayor.
Other items on Crosby’s CV include lobbying for tobacco firm Philip Morris, and he is reported to have signed a £6m deal to lobby on behalf of the firm just last November. Crosby has also advised energy firms engaged in Fracking in Australia, championing shale gas over sustainable and renewable energy.
And in a remarkably unsurprising turn of events, this year the Tory party chose to ditch its policy on plain cigarette packaging, Osborne announced a raft of tax breaks on Fracking firms, and David Cameron went from promising “Vote Blue, go Green” to “get rid of all this green crap.”
Just the Tip of the Iceberg
This is just a tiny sample of the endemic corruption that has delivered the UK parliament into the hands of big business and corporate criminals. This circle of mutually beneficial patronage breeds decisions made in self-interest not the public interest. This week’s Prime Minister’s questions could be summed up as thus:
Ed Miliband: Your party is in hock to corporate criminals!
David Cameron: Your party is in hock to corporate criminals!
And both were right. Our whole system and the institutions within it are in hock to corporate criminals. The system is broken. It is corrupted. Venting one’s spleen about this insidious corruption without challenging the system that breeds it is as futile as running into a rainstorm naked and moaning about getting wet. Like the shape of a glass gives context and shape to the water within it, so neoliberal capitalism creates the context and shape of the people, corporations and institutions within it. Want real and lasting change? Don’t fiddle with the players, start a new game.
Don’t get angry, get involved!
Steve Keen ‘Debunking Economics’ – want to understand why our economic model doesn’t work, and what alternatives are available? Read this.
Co-operative Movement – it is important to separate the co-operative movement, from the recent disgraces of the Co-operative bank. If you want genuine democracy and equality in your school, business, bank…this is a great model to get involved in.
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