What to do about Bankers?

In my day job, I have worked regularly in the City for many years. As an IT specialist, I'm just the hired help but its enabled me to see first hand how the many diverse organisations that make up our financial sector operate. And of course there are good ones and not so. Many companies I work with are supporting fast growing businesses and creating real jobs and opportunities. Others, however, are trading and speculating between themselves, adding no social value, whilst generating huge profits and bonus pools.

Whilst the bankers and financiers have enjoyed huge personal rewards in recent years, our communities are now paying the price in lost jobs, shattered savings and service cuts.

There is now no justification for huge bonuses for individuals, built up on the back of government funded liquidity intended to protect out financial system from meltdown. Especially when its many of the same organisations and individuals whose high-risk behaviours have been responsible for getting us into this mess.

Dealing with this is very difficult. Knee jerking into punitive taxes and caps on personal or corporate earnings - popular though that may be - risks throwing out the baby with the bathwater. What we need is an intelligent approach which drives long term, structural change in the financial service industry, its behaviours and its contribution to our economic health.

I am hopeful that the baleful influence of the City on Labour thinking has finally been broken. The governments comments in the last few days on the importance of building up manufacturing & industry is welcome and long overdue.

A litmus test for me will be how Alistair Darling brings a Labour solution to this over the next few days.

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What a parcel of rogues in our nation....

Spending St Andrew’s day launching a white paper on an independence referendum shows just how out of touch the SNP have become. Instead of working to get us out of recession, create jobs for young people and get more teachers into our schools the SNP plan to spend millions on a referendum that we already know the answer to. Scotland deserves better. The coming election will be about jobs and the economy. The SNP have no answers and seem to be pinning all their hopes on the Tories winning power.

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Windfarm Walk 2

An interesting and enjoyable day on Monday, being shown round Lochindorb and the Dava by local campaigners against the wind farms being proposed for the area. When you stand on the highpoint of the B9007 across the moor, or on the shores of the loch, you are surrounded by one of the most unspoilt landscapes I have seen for a while. The visual impact of so many wind turbines right across the hillscape - not to mention the access roads that will need to be built - will be huge.

If we are serious about tackling climate change we need to increase our use of renewable energy sources. Wind farms have a big role to play - or so the current political consensus argues - and I can certainly testify that the Dava is windy. Or at least it was on Monday!

Which goes to the heart of the argument made by the local campaigners I met. They argue that the intermittent nature of wind-power generation will actually increase the reliance on non-renewable sources (coal and oil) by requiring such baseload capacity to be available for when the wind isn't blowing enough (or blowing too hard) to generate power. The more wind-dependant renewable capacity you build, the more backup capacity you need in order to stop the lights going out. To make their case, I was presented with a copy of Dr John Etherington's recent book , "The Wind Farm Scam". Its heavy going and packed with a lot of power engineering science (I knew my physics degree was going to come in handy one day). If the arguments in the book are right, then we need to think very carefully about what we are doing with wind farms.

But are they? And even if they are, what are the alternatives?

This is a complex issue with no easy answers. I'd be very interested to hear views on the subject.

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Wind Farm Walk

I'll be heading to Lochindorb and the Dava on Monday, to meet local people campaigning against the plans for wind farms in the area and to walk round the loch and some of the surrounding hills. I want to see for myself where such developments are being proposed and what the impact on the area will be.

I’m committed to strong and radical action to tackle climate change. I am also of the view that land based wind generation – including large and small scale Wind Farms - has an important role to play in the renewable energy mix. Inevitably, that will mean difficult decisions need to be made. But, we need to get the balance right and ensure we don’t compromise our unique mountain landscapes for only short-term gain.

I'll post again on this topic after my visit on Monday. Meantime, I'd welcome comments with views both for and against such developments.

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Keep Cool at Christmas

Spent an interesting couple of hours yesterday with Isobal MacInnes, the Usdaw rep at the Coop in Inverness, helping to leaflet shoppers about Usdaw’s “Keep your cool at Christmas “ campaign. The event was organised as part of Usdaw’s Freedom from Fear Week.

Usdaw’s most recent survey shows that two thirds of shop staff have been abused in the last year and nearly 10% have suffered physical assault. A major cause is angry customers and reports of ‘trolley rage’ incidents are on the increase. The shop staff that I met told me that Christmas is the time when they suffer most anger and abuse. Retail shop workers are in the front line of dealing with issues such as under-age drinking and the resulting verbal abuse can leave staff upset and depressed.

Shopworkers need much more support from their management as well as better understanding of these issues from the wider public.

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How Not to Reform the Banking System

Interesting to hear this morning that Mervyn King (Bank of England) has jumped on the Nick Clegg (LibDem) bandwagon to separate retail and investment banking. Or maybe it’s the other way round….

To be fair, this is an idea that a few months ago I though had some merit. It’s the “masters of the universe” at the big investment banks – or so the theory goes – that took the dodgy risks, for huge personal rewards, that caused the financial crisis. Separate them from the retail banking sector and our savings and mortgages should be safe. This is, after all, what the US did back in the 1930s. And in the UK, the big hybrid banks like Royal Bank of Scotland and Barclays only emerged after Thatcher’s financial de-regulation in the 1980s – the so called “big bang”.

When you really dig into what happened, however, you learn that it was sales-culture driven lending and the invention of ever more exotic financial products and transactions between banks that were at the heart of the problem, not organisational structures.

Northern Rock was a retail-only bank. It went bust entirely by itself as a result of a bonus driven sales culture. And the two big institutions that collapsed at the peak of the crisis – Lehmans and Merrill Lynch - were stand-alone Investment Banks. RBS needed bailed out, but it was bad management and a skewed culture of risk/reward that caused the problem, not its integrated retail and investment banking structure. As for Goldman Sachs……

Trying to re-structure the banking sector now will be like trying to put the genie back in the bottle. And to attempt such a solution in the UK, with what are global companies, would be doomed to failure. What we do need is strong regulation, agreed globally, that is firmly applied.
And we need to think seriously about the old idea of taxing inter-bank transactions, to dampen down self-serving trading between institutions, which generate no external value.

Mervyn King is being very vocal now, but I think its much more to do with making friends with David Cameron than good sense. What did he have to say over the last few years whilst this situation was developing? Not a lot. So I’m not inclined to listen now. Not to him, nor to Nick Clegg and his LibDem colleagues on the bandwagon..

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After the Conferences, a Question

After all the high political rhetoric of the party conference season, its back to the real work of local politics. Yesterday we delivered a new leaflet into Dalneigh and today we will be doing the same in Kingussie.

After all the conference speeches, I have just one question for Danny Alexander and Jim Ferguson. Both of your party leaders have promised to make big cuts in public spending if they get into power ("savage cuts" in the case of Nick Clegg and the LibDems). But, if its the bankers, financiers and some of the other top earners in this country who created this crisis, why is it now public sector workers who are being asked to pay for it?

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