In Britain ruling class parties, whether Labour, Conservative or Lib Dem, have to sustain Britain’s financial sector and the City of London’s vast international interests and connections to ensure the British economy remains a ‘world centre of finance’. Half of the world’s top 100 banks, 46% of asset managers and 46% of top insurers have a presence in Britain. 80% of Europe’s £440bn hedge fund assets and around 60% of its private equity firms are in Britain. The assets of UK banks are five times Britain’s GDP. Britain’s foreign assets are also around five times Britain’s GDP and 60% of those assets in 2008 (£4,261bn or nearly three times the GDP) are loans and deposits abroad by UK banks, a gigantic usury capital extracting wealth parasitically from the rest of the world. The City is the financial arm of British imperialism and has always been at the heart of the British state.
The Labour Party was elected to office in 1997 as the preferred party of the ruling class, and promptly set about showing why. Within days, the government had handed control of the Bank of England to the City of London. Lord Sainsbury became science minister, Lord Simon from BP advised on trade policies and Martin Taylor, Chief Executive of Barclays Bank, advised on tax and benefits, David Edwards from NatWest was appointed Director of Oftel, Sir Colin Marshall of British Airways became head of the task force on saving energy in industry and Sir Peter Davis of Prudential advised on ‘Welfare to Work’. The chair of Shell advised on the environment, arms manufacturers Rolls Royce, Vickers and BAE Systems all had staff at the Ministry of Defence. BP inserted staff into the British embassy in Washington and the Foreign Office’s Middle East desk. It was government by the ruling class for the ruling class: there was never a question of the working class, not even Labour’s trade union allies, getting a look-in.
Nothing changed when it came to dealing with the present crisis. The City expected the government to socialise the debts of the banks and financial institutions, and it did so. The City expected its representatives to be directly involved in deciding government policy, and they were. Brown set up the National Economic Council (NEC) in which former investment banker Baroness Videra, now Minister for Economic Competitiveness, plays a leading role alongside the Minister for the City, Lord Myners, who served on the board of GLG Partners, one of the largest hedge funds in the world. Advising the NEC are 17 ‘business ambassadors’, including the chairs of Barclays, Lloyds TSB, Standard Chartered and the London Stock Exchange.
During October and November 2008 the government spent £61.6bn saving the Royal Bank of Scotland (RBS) and HBOS. The following year, one month before announcing losses of £24.1bn, the largest loss in British corporate history, RBS chief executive Sir Fred Goodwin took early retirement with a £12.3m pension. This March, the deputy chief executive, Gordon Pell, retired on £13.6m. Bob Diamond, head of Barclays investment wing, is being paid £6m as part of an ‘incentive scheme’ and was given an additional £27m in 2009 for selling his shares in the bank’s asset management arm. Labour hasn’t the slightest intention of seriously challenging this state of affairs: the City has made it clear that without these bonuses, pension schemes, or golden hellos and goodbyes, it would not be possible to sustain its position as the world’s leading financial centre.
FRFI 214 April / May 2010
