Brendan Barber: Barclays bonus pot <i>is not</i> justified

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The Independent Online

Barclays' super-profits are just one more sign that banks win in both good times and bad. And, of course, these profits are on top of the bonus pool for their top staff.

There will be real public anger at these figures. The British have a deep sense of what is fair, and this fails every test. People are still losing their jobs because of a recession caused by excessive risk-taking and greed in the finance sector. Firms still complain that they cannot get loans.

Barclays will say that they did not receive direct state hand-outs. But that is not the point. They now trade in an environment where everyone knows that they are too big to fail, and that if necessary they would get support. Quantitative easing and other measures were meant to help rebuild balance sheets, not feed the bonus pool.

But the problem is much wider than Barclays. How is it that banks became so much more profitable than other sectors? Banking provides an essential service, but somewhere along the way there has been a profound market failure. Banks have encouraged "socially useless" speculation because they have been able to cream off an unfair cut of the transactions they process. Not even shareholders have been able to control institutions that are now run in the interests of those who get the bonuses, but do not bear the risks.

This damages the rest of the economy. We may now be able to see that much of the pre-crash economic growth led by the finance sector was illusory, but it certainly fooled policymakers at the time who privileged banking above the rest of the economy. The huge bonuses paid year in, year out have unbalanced our social structures too, as a new class of super-rich float free from the normal obligations and mutual relationships that make up a cohesive society.

That is why the campaign for a Robin Hood tax has helped to galvanise a huge groundswell of popular support behind the call by policymakers and distinguished economists for financial transaction taxes starting at just 0.005 per cent – 5p in every thousand pounds.

It would be a big mistake to start trying to reduce the deficit until the risk of a double-dip recession has passed and growth is restored. But what is clearly fair is that banks and bankers should make a proper contribution to putting right the damage they caused.

Brendan Barber is general secretary of the TUC

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