Merlin: a very, very cheap trick by the banks
The financial sector, according to the Bank of England, is effectively subsidised by about £100 bn a year, largely because of the implicit promise that now exists that if they fail, the taxpayer will bail them out. On top of that, senior bankers are still raking in what they think are restrained bonus payments and salaries, which for most people even in the developed world are beyond the dreams of avarice. So you might have hopes that the Government might recognise public anger about the bailout and the troughing, and claw some of the money back through taxation. But today, your hopes would have been dashed, as Project Merlin flops weakly into the limelight.
Project Merlin is a cheap con trick, pretending the banks are being brought to heel when they are actually being let off the hook. Banks are making such massive profits and paying such eye-watering bonuses because taxpayers prop them up. We’ve paid the banks billions and now they’ve ‘generously’ agreed to lend some of it back. It’s time the banks paid their fair share. A Robin Hood Tax could claw back £20bn a year to help prevent devastating cuts to public services, tackle climate change and support poor people here and abroad.
Robin Peston summarises the main points of Project Merlin on his website, and it makes dismal reading. Liberal Democrat Lord Oakeshott, who has been raising expectations for weeks – probably in a doomed effort to put some spine into the Treasury and Government negotiators – has resigned his position as an adviser to the Government over the feeble deal. The TUC criticised the Government’s failure to persuade the banks to commit to measures that would promote growth – if we really are beginning a recovery, then the small increase in lending is really not much more than what you would expect to happen anyway. There are 4.8 million small businesses in the UK, so if they all ask for a loan from the banks this year, they’ll each get … er …. £2,000 each – that should get their businesses surging ahead!
And the proposed disclosures of bankers’ salaries are also underwhelming. Although more than we had previously, we will still only know the details of a few hundred bankers’ bonuses, when there are thousands pulling in huge payouts.
But above all, the attempt to “move on” from the public anger about the bank bailout is obscene. The announcement of a slightly bigger bank levy than expected will still leave the banks quids in if you take into account the changes also being made to corporation tax and the facility to carry over losses against tax liabilities. They will end up paying even lower taxes than ever, while the rest of us have to find the increased cost of VAT and National Insurance.