Banker's Bonuses

The outcry over large bonuses paid in the financial services sector, in particular investment banking, is understandable but the argument seems to be missing a couple of critical points;

1. we should not really be so concerned with how private businesses choose to run their affairs. What has impacted the general public is the enormous amount of money the government had to invest into the banks to avoid a terrible crisis. Steps are already under way to ensure we never have to do this again and in future poorly run banks should be allowed to go to the wall with investors taking the hit as they would in any other business.

2. no-one seems to be asking how investment banks can make such huge profits (in good times at least) that they can afford to pay such massive amounts to their staff both in salary and bonus. Only a small proportion of these profits come from proprietary investment (i.e. where the bank gambles with its own money) and the majority comes from trading on behalf of clients, the largest of which are the pension companies. So, the fees paid by pension companies make up the majority of the banks profits and it is our money that goes into these investments whether it be in the shape of a pension or an ISA.

In any other form of business we would be asking questions about the competitiveness of a market that allows such massive profits to accumulate. Undoubtedly the mega-mergers that went through in the wake of the 2008 financial crisis were bad for competition and the sooner they can be reversed the better.

Alternative forms of financial management should also be encouraged such as credit unions, co-operatives, etc that retain capital within a community instead of seeing it disappear into the pockets of a faceless, probably overseas multi-millionaire.

Supermarket Low Pay

Rates of pay for the lowest earners at the big four supermarkets are between £6.50 and £7.50 an hour and many of their employees need state benefits just to make ends meet. On Newsnight they estimated that this costs some £50 a month per employee on average.

The idea of a Living Wage at around £8.50 was floated and it would seem fair to employees of such large businesses, so perhaps all businesses with a staff of 50 or more should have to meet the Living Wage. Despite the large profits and high executive pay these companies would have good cause to be upset by this.

I would suggest that National Insurance should be cut by a couple of percentage points in order to lower the costs for businesses to employ people. The nett cost to the tax man should not be that significant due to the corresponding drop in benefits paid out.

Almost all the extra money paid to such low earners goes straight back into the economy, some in direct taxes and others through indirect taxes (VAT) and the knock on effect of increased spending on the high street.

For a just society we have to aim for everyone to have the opportunity to work and we also need to find ways to reduce the consumption rate of all natural resources. Much better to spend tax money on getting people into work than artificially reduce the cost of non-renewable resources such as fossil energy.