"Why don't defrauding bankers go to jail?

This is "a great rant" on Channel 4 news of BBC Economics editor, Paul Mason, following the report yesterday of yet another Banking Fraud. 5 major banks allowed their traders to fiddle foreign exchange rates to defraud their clients and increase their bonuses. Paul is clearly very angry that we have fraud after fraud after fraud in the City and nothing ever gets done about it. He calls for full and effective regulation of the sector and banks should stop whingeing about being held to account.

I totally agree but think that share owners also must share the blame for failing to act as owners and take responsibility for the companies they own. We in theory appoint the executives at annual AGMs to run these companies on our behalf and it is clear that we can be pretty rubbish at it. We often seem to appoint "numpties" to do this who are at best incompetent or perhaps equally dishonest.

Hat tip to Sunny Hundal on Facebook for clip and a great title.

In my world I see people being jailed for defrauding the state of relatively small amounts of money for claiming benefits and not declaring a partner or a part time job. Yet none of the the bankers who have defrauded the state of billions of pounds have seen any porridge? This is unfair.

#Lab13 Welfare Reform: Coping with Change?

Lunchtime conference fringe on welfare reform, chaired by Helen Simpson from Circle Housing Group. First up was East Ham MP and Shadow Minister for Employment, Stephen Timms speaking about the Labour plan to tackle welfare by job guarantees for the long term unemployed. He sees housing associations as playing a key role in this as a gateway for unemployed tenants into work.

A future Labour Government will get rid of the bedroom tax. Which is a punishment for people over something they can do nothing about. When he goes canvassing in East Ham he meets people in fear of the Bedroom tax. Which will mean more people leaving social housing for the private sector and costing even more in housing benefit than they did in the social sector. There is a complete debacle over the introduction of universal credit. While the principle ok the implementation needs to be rescued.  We need a contributory element to benefits to rebuild trust in social security.

Sian Williams from London East End Toynbee Hall (Clement Attlee and William Beveridge) pointed out that it was not just beneficiaries who will be struggling to cope with the change - so will local authorities, Government and the 3rd sector. The cuts and caps will mean less money and more administration. There are some good points, such as it may result in a better relationship with providers, if beneficiaries are seen as customers. But massive costs to society such as forcing children to move schools. 

Christopher Smith also from Circle, told us that they had 3500 households impacted by bedroom tax and 200 by total benefit cap. Big fear that direct payment of housing benefit will result in greater arrears.  36% of households have a member who is disabled (this in in their general needs properties - not care projects). Some residents will be losing £300-350per week in London (Old Ford and Circle 33 properties). The new benefit universal credit is supposed to be "digital by default" yet 45% of residents report that they have no internet access.

Since April this year to date 24% of households affected had paid a part of their bedroom tax, 25% have paid nothing.  This is quote "a major challenge". Finally, Universal credit may bring about a risk based approach to new tenants. If arrears continues then it will have an impact on their ability to build new homes.

Last speaker was journalist Sunny Hundal who gave a more philosophical prospective about welfare reform. 1. People don't pay attention to detail 2. They don't care about facts and prefer emotional stories 3. Views on welfare are very difficult to shift.

People still think Tories are hard while Labour soft on welfare. They support only what affects them eg pensions, child care but not unemployment benefit. Labour should be more honest and not pretend to be tougher than Tories since people will just not believe them. There is a future for universal services such as Surestart but not handouts.

My question to panel started off as a statement (doesn't everyone?) that Labour should be more honest about welfare and explain that a decent social security safety net for all does cost more money that that all of us need to pay more taxes not just the very rich.

I also asked where was the voice of tenants in this debate? You have the voice here of the Labour Party, the unions, housing associations and the housing great and the good? If tenants had a voice would the Tories had been able to get away with Bedroom tax? (as usual with my questions, I didn't get an answer but time was short as we all had to rush off to hear Ed's speech).

Say on Pay

I’m having a bit of a “row” with Sunny Hundal at the moment over on Facebook about his support for a “High Pay Commission”. I think the idea is probably well meaning but just barking up the wrong tree.

A genuine review (or even call it a commission if you must) of the best way to tackle excessive executive pay would be welcome - but as soon as people started suggesting that this may result in maximum wage regulation ratios, 90% taxation and a national “incomes policy” - it is simply a non-starter and even a distraction.

By co-incidence PIRC and the Railway Pensions fund are holding this “Say on Pay” event next month on UK’s experience of shareholders vote on remuneration (trends in Executive Pay both pre and post company AGM votes, level of shareholder opposition to remuneration reports).

There is actually currently no legal reason why we cannot get real independent shareowner representatives on Company boards and remuneration committees.

Personally I feel that we can only really tackle excessive pay when we have effective industrial and shareowners democracy. Don’t forget that employee representation on Company Boards is relatively common in many parts of Europe. Why aren’t we talking about this issue?

There also needs to be better regulation and fairer taxation but a High Pay Commission as currently spun will achieve nothing and set us back. IMO.

I’m not suggesting that Tom P agrees with me on this issue but I like his blog “about me” statement

“I'm interested in getting the labour movement and the Left to understand the capital markets properly. There's plenty that needs fixing, but we need to get beyond simplistic anti-City and anti-business rhetoric to do it”.

The “left” have got to stop retreating to their “Bash capitalism” comfort bunker whenever financial policy comes up.