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The lords of humankind

The social damage of governmental and financial negligence in the banking crisis is clear from the perspective of Scotland’s border-country, finds the scholar-politician Christopher Harvie.
Christopher Harvie
9 December 2009

The life of a parliamentarian in 21st-century Scotland involves close attention to bus timetables. The fifty-kilometre journey from the borders town of Melrose to the Holyrood parliament in Edinburgh for an early division involves catching the Munro’s bus at 6.25: daunting on a cold winter morning. And on this occasion nearly fruitless, as the connecting First Bus X95 to Edinburgh from nearby Galashiels was just leaving the bus station there when the Munro’s pulled in (Britain’s Transport Act [1985] considers cooperation between companies, like seeing that services connect, “in restraint of trade”). Oblivious to this, the station shunter John Gibson ran out and stopped the Edinburgh bus, not the first service he’s rendered this commuter.

That meant I arrived in time for a short debate on a cabinet reshuffle, which saw my boss (and Scottish National Party [SNP] colleague) Mike Russell - formerly minister of culture - enter the cabinet as education minister. The SNP government’s long honeymoon, which has lasted more or less since the election of 3 May 2007 which brought it to power (and me from academia to politics) has been over since the failure to take the Glasgow North-East constituency from Labour in the by-election on 12 November 2009. Now the Scottish press has declared open season on first minister Alex Salmond’s campaign for a referendum on independence - certainly more fun than covering the proceedings of the economy-committee’s inquiry into the banking disaster. Here, journalists limit themselves to the statements issued by the banker-witnesses, and circulated by their departments. Yet the same witnesses admit that the questioning has been acute, not to say gruelling.

An inquest

The responsible government bodies have been the worst witnesses of the lot. The Office of Fair Trading (OFT) sticks to the rhetoric of producing “more perfect markets”; United Kingdom Financial Investments (UKFI) - the government-owned company set up in November 2008 to manage the state’s investment portfolio - is flippant about alternative models of banking, such as the largely public or mutually-owned German system of savings-banks. True, the state-appointed Royal Bank of Scotland (RBS) chairman Stephen Hester is painstaking in answering our questions, as is the Lloyds’ residuary legatee of the Halifax Bank of Scotland (HBOS), Archie Kane. But the secret chambers in these big banks have stayed that way. How much, for example, did Britain’s prime minister Gordon Brown know about the real condition of HBOS’s finances when he expedited the merger with Lloyds in October 2008?

Amid the gathering storm, the small businesses that needed funding had to wait, while Lloyds HBOS juggled the multi-billion business of looking after their corporate clients - among them the high-profile Tom Hunter, to whom Peter Cummings (then the “risk-taking” head of corporate banking at HBOS) had loaned the cash to buy Crest Nicholson and McCarthy & Stone in 2006-07 at the top of the house-price bubble. Hunter is fond of confiding to his fellow-Scots the importance of being more entrepreneurial. Fine, but this needs a local, remutualised banking system aimed at low-carbon investment in better housing and public infrastructure. Is the City interested? Don’t ask.

A billion-quid mess

There is our real society, held together by people like John Gibson on small incomes being creative and helpful and public-minded; and there’s a cash-driven machine of Dickensian inefficiency (private and public sector alike), dominated by jobsworths who demand comparability with the financial sector’s bonus-boys. The latter have reached the Scottish borders region too; “Pride in their port, defiance in their eye/ We see the Lords of Humankind go by”, rumbling down the roads in their four-wheel drives. In nearly four years here I haven’t exchanged a word with any of them; but I notice that one of the advisors of the Borders Party, whose raison d’etre is to prevent the reopening of the railway to Edinburgh - closed in 1969, an earlier example of penny-pinching and society-destroying government folly - is advertised as a merchant banker with Lazard Freres.

Soon after the committee meeting on 25 November 2009 - alongside the revelation that the boys had plunged RBS into another billion-quid mess in commitments to Dubai - Stephen Hester was on the news warning that his associates would walk off the job at RBS unless they got their bonuses.

The evidence provided at Holyrood is more than enough to understand that the poor are being robbed by the indecently wealthy, and that the latter are also in many cases crassly incompetent and (since based in tax-havens) lacking any properly civic connection. The few symbolic expressions of disgust at their excesses, such as the lobbing of a brick through the Edinburgh front-window of the former RBS chief executive Fred Goodwin, are instantly branded “mob rule”. Well, the real Mob is still out there - and it is time they are punished rather than rewarded.

It happened that I turned over pages of a book, Industrialisation and Culture, I had co-edited for the Open University nearly forty years ago - praised in the Guardian by Raymond Williams of Wales’s border-country - to find William Cobbett, in Surrey in 1825, condemning the farmers’ mistreatment of their men, and seeing behind this the pitiless profit-drive of the City:

“What misery is all this! What a mass of materials for producing that general and dreadful convulsion that must, first or last, come and blow this funding and jobbing and enslaving and starving system to atoms!”

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