TUC Congress

Banking bailout was unfair, Mervyn King tells TUC

The Bank of England governor Mervyn King today described the huge banking bailout as "unfair" and appeared to sympathise with calls for multibillion-pound tax evasion to be tackled when he spoke to union activists.

Mr King told the TUC Congress in Manchester that he understood the strength of feeling over the size of bankers' bonuses and said "radical reform" of the UK's financial system was needed.



The 62-year-old faced minor protests from some banner-waving delegates and a walkout by the Rail Maritime and Transport union delegation, who retreated to their exhibition stand to watch children's TV.



He was also told bluntly that bankers were "greedy bullshitters" and that he had failed in his job.



As he waited to speak, delegates called for a high pay commission to investigate the "out of control" wages of executives and other high earners.



The Communication Workers Union said a commission should examine the difference between the highest and lowest pay in leading companies.



General secretary Billy Hayes said: "The blatant double standards in pay for those at the top of companies compared to those at bottom is outrageous and leads to dissatisfaction and a divided society of haves and have-nots."



During his 20-minute speech, only the second by a Bank of England governor to the TUC Congress, Mr King warned that the Government risked plunging the UK back into crisis if it did not reduce Britain's record deficit.



Amid union fury over next month's planned public sector spending cuts, the central bank boss said "vague promises would not have been enough".



Mr King said he believed it was vital the Government set out a clear plan for reducing the deficit and warned that the UK could otherwise have suffered the kind of woes seen in Greece.



"As a result of a failure to put such a plan in place sooner, some euro-area countries have found - to their cost - a much more rapid adjustment being forced upon them," he said.



But he told delegates they were "entitled to be angry" as he admitted the financial sector and policymakers were to blame for the financial crisis that had landed the UK with the largest peacetime budget deficit in its history.



Regulation of banks needed to improve and poorly performing banks should be allowed to fail, without risk to depositors or taxpayers, he said.



"In 2008, banks were bailed out not to protect them but to protect the rest of the economy from the banks. That may not seem fair - and it isn't - when other companies, such as Jaguar, had to stand on their own feet or go to the wall. So banks too must face market discipline."



Mr King said there was a "perfectly reasonable debate" about the speed at which to reduce the UK's financial deficit and said the onus was on critics to come up with a better way.



Mr King said in a question and answer session that he had "enormous sympathies" with public anger over bank bonuses, adding: "I understand the strength of feeling.



"In fact I am surprised it has not been expressed more deeply."



He agreed it was hard to understand how the City could start paying big windfalls again just two years after the taxpayer bailed out the sector.



But he said the country needed to address the root cause of why banks felt they were able to pay such large bonuses to take risks rather than ban payouts.



He faced tough questions from the audience over the City's behaviour and the spending cuts as well as the Bank's failure to spot the financial crisis.



Janice Godrich, president of the Public and Commercial Services union asked Mr King if he agreed that more should be done to close tax loopholes and tackle the £120 billion of uncollected tax revenues as well as go after the "criminals" engaged in massive tax evasion.



Mr King said the Bank of England was not involved in tax collection, but he added: "I hear your points and they seem persuasive."



The governor told the TUC that banks' finances were not in good shape, adding: "It will take time to nurse the banking system back into health. There is not a simple short-term solution."



Mr King received a few seconds of polite applause from the delegates.



In a following debate, GMB President Mary Turner said: "Mervyn, if you want to know what went wrong I can tell you - the bankers are greedy bullshitters."



TUC general secretary Brendan Barber said later: "Congress clearly welcomed the Governor's strong condemnation of the culture of bonus excess and his clear recognition that the crisis was caused by banking boardrooms.



"We have to disagree over the timetable for reducing the deficit but delegates were impressed with his willingness to engage."



Paul Kenny, GMB general secretary, said: "His analysis of the excesses of the banking system reminds me of Jessie James warning people in the Wild West about the dangers of train robberies. The truth is that he presided over the Bank of England and he never spoke out when he should have done.



"His statement that the banking crisis and the recession that has followed was not foreseeable is plain wrong. Many voices including that of the GMB spoke out. He should have done the same. The fact is that he failed us."



Bob Crow, general secretary of the Rail Maritime and Transport union, who boycotted the speech, said: "RMT delegates want to hear from the people suffering from this economic crisis, not waste time being lectured by the people who created it."



A Unite spokesman said: "The governor acknowledges that the banks are not yet under control. This is a message he needs to take to George Osborne, not the TUC.



"Mervyn King says he is willing to listen to alternatives. Using the state-owned banks to pump money into struggling business would be a great start. That would help save jobs and ease pressure on the Government's welfare bill."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us