Thursday, February 12, 2009

Anger rises as unemployment soars

Flashback to the 1980s when unemployment was around 3 million

Anger and resentment in Britain is growing as the recession deepens. While there is of course concern amongst the unemployed as to how they are going to pay their bills or find another job, there is increasing anger directed towards the government and more recently top bankers. The rhetoric coming daily from the politicians is not solving the economic problems that Britain faces. And many see government actions as only helping the banks and financial institutions instead of the ever increasing numbers of unemployed and others struggling to pay their bills and mortgages.

Banks have been a particular target as many seem to be failing in their responsibility of passing on interest rate cuts to customers. In addition, most of the financial institutions have become unwilling to lend despite the government bail-outs amounting to billions of pounds. In the last week there has been an explosion of criticism mounted against the main high street banks. From individuals to high profile celebrity chefs, there have been complaints that the banks are just plain refusing to increase overdrafts or make loans available. Antony Worrall Thompson a well known celebrity chef said he had been forced to close four of his restaurants after Lloyds bank deemed him a credit risk. He said he was furious that the bank had refused to extend his overdraft by the £200,000 needed to keep the business afloat. The closures have added a further 60 people to the unemployment lines.

This week the Labour government released new figures showing unemployment had reached a 12 year high of more than 1.97 million [BBC]. The figure does not take into account those who have lost their jobs since the end of December and excludes many jobless who are unable to apply for benefits. The Office for National Statistics has reported that nearly 3,000 people are being made redundant every day and much of the UK press have drawn parallels to the 1980’s Conservative party election campaign when a famous poster showed a long queue of unemployed under the banner ‘Labour isn’t Working’.

While the long list of unemployed queue for their benefits and search for new jobs, it is the bankers who are being blamed. Despite the economic crisis gripping the country, many top bankers are still being paid massive bonuses. Even those bailed out by the government have continued with the controversial policy. The grilling by MPs this week has only tarnished their image further and led to lurid headlines in the British press. Branded ‘Scumbag Millionaires’ by one tabloid newspaper, four top bankers apologised for misjudging the economic crisis. Lord Stevenson, former Chairman of Halifax Bank of Scotland [HBOS], Andy Hornby, former Chief Executive of HBOS, Sir Fred Goodwin, former Chief Executive of the Royal Bank of Scotland [RBS], and Sir Tom McKillop, former Chairman of RBS, were subject to a four hour interrogation by a selection of cross party MPs.

Sir Fred Goodwin had once received a salary of £1.29 M and a bonus in excess of £2.8 M. The bank he was once in charge of has been bailed out to the tune of £20 billion by the British government. Andy Hornby had received a salary of £1.93 million and a bonus of nearly half a million pounds. His bank, HBOS has so far received £17 billion from the government. Hornby said the bonus culture had been “proven to be wrong in the last twenty four months”. But the apologies and statement will mean little to those struggling to pay their mortgages, worrying about debt, unemployment or worse. On the street members of the public said the bankers were only “motivated by self interest”, with many expressing disgust at the huge salaries and bonuses paid out to bosses while ordinary customers were dealt increasing bank charges and interest rates.

During the four hour debate it emerged that Paul Moore, a former employee at HBOS, had warned the bank and the Treasury Select Committee of problems ahead. In a memo to the TSC he said there was “... a total failure of all key aspects of governance. In my view and from my personal experience at HBOS, all the other specific failures stem from this one primary cause” and adds that “...I was obliged to raise numerous issues of actual or potential breach of Financial Services Authority regulations and had to challenge unacceptable practices...”

However, Lord Stevenson dismissed Moore’s interpretation of the risks. Paul Moore meanwhile has alleged he was ousted from his job at HBOS and replaced by Sir James Crosby who himself has since been appointed as a key advisor by the government to help sort out the mortgage and banking crisis. Moore was critical of his replacement saying Crosby “had never carried out a role as a risk manager of any type before”.

The accusations by Paul Moore has resulted in calls for a new investigation by the Conservative party. “What we need to know is whether the allegations now made at the time he was running HBOS are true or not, and I think the government need to find out if those allegations are true, then we can decide as country whether it’s right that Sir James Crosby is involved in the regulation of the banks going forward” the Shadow Chancellor, George Osborne, said.

But before Prime Minister Gordon Brown could raise any allegations with Sir James Crosby, the millionaire banker quit his position as vice-chairman of the FSA. Yesterday he was holed up at his million pound mansion in Harrogate in northern England as journalists and photographers waited outside [BBC].

On television and radio chat shows the anger coming from the public is still only simmering. But on picket lines and protests outside oil refineries in recent days the anger was definitely boiling over. The fight for jobs may becoming dirtier in the coming months as foreign workers take up UK jobs. New statistics show that the number of non-UK born workers increased by 214,000 in the year up to December while the number of British workers fell by 278,000 over the same period. It is a growing situation that has prompted calls to cut back the number of non-EU work permits being issued. Last year a record 151,000 work permits were handed out to foreigners. The statistics will only fuel the anger in a difficult job market. With opportunities at home drying up some may be looking abroad to beat the credit crunch. The Jobcentre Plus website is advertising almost 200,000 posts in Europe, far less than the number offered in the UK. However many offer very low wages and are no real solution to the millions of job seekers. But there are some opportunities even further a field, if one doesn’t mind the cold [Bloomberg]. The British Antarctic Survey is advertising several posts on its website paying upwards of £23,000 per year [].

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