Pay Gap, Debt Cliff

Bankers and their suitcases stuffed with cash! HBOS – the bank that resulted from the merger between Halifax and Bank of Scotland – had 15 directors in 2007, and they sure took a lot of profits as ‘remuneration’. The directors shared a pot of £17.690 million, which if it had been distributed evenly, would have worked out at £1,179,333 each. The bank’s employees received an average of £31,584. Not a bad income, well over the national average – but each director got, on average, 37.3 times more. That is quite a gap.

We know now that HBOS was floundering. Government ‘rescued’ it by engineering a merger with Lloyds TSB to form Lloyds Banking Group, which opened its doors in January 2009. The government – us taxpayers, in the end – had to chip in a few billions of £s here and there to keep the whole show on the road.

Barclays’ directors raked in even more than their HBOS counterparts, a total of £29.273 million in 2007, a mean of £1,721,941. Barclays wasn’t treating the 17 directors at all meanly! Lots of the workers did quite well too, as their mean income was £54,251, but the directors were taking home 31.7 times more.

One of the more abstemious banks in 2007 was Northern Rock. Well, there was a run on it during the year and it was nationalised in February 2008, so it had to show a little restraint. The 13 directors received £3.376 million between them, an average of £259,692. The bank’s staff were not nearly so well paid as their fellows in Barclays, or HSBC, or even HBOS. Their average income was just £20,145 (well, it’s a northern bank, and everyone knows that northerners can live quite happily on scraps thrown from the London table). Northern Rock was verging on the egalitarian, though, as the gap between directors’ and workers’ income was only 12.9 times!

The UK government almost controls Lloyds Banking Group. It does control Royal Bank of Scotland Group, and it owns Northern Rock and the mortgage business of Bradford & Bingley. These banks were deemed too big to be allowed to fail. Their executives (OK, a few have moved on) remain very well paid.

Banks, and bankers, were allowed to get out of hand because government saw its job, its only real job, as helping the economy to get bigger and bigger. Society became the servant of the economy. Who was it who said that ‘Divitiae bona ancilla, pessima domina’ (Riches are a good handmaid, but the worst mistress)? Oh yes, it was the philosopher and scientist Sir Francis Bacon, 1561 to 1626, who died owing £22,000.

We owe rather a lot more than that now, as taxpayers. The UK’s national debt was £513 billion in June 2007. In just 18 months to January 2009 the national debt has quite possibly trebled to over £1,500 billion, or £1.5 trillion. We can’t put a definite figure on it because we don’t know exactly how much the bank bailouts and other economic ‘stimulae’ are going to cost us. In round figures, though, £1.5 trillion is £25,000 for every man, women and child in the UK.

Mission impossible?