I wrote back in 2011 that the banks are brilliant. but very few people realise or understand this because of the tirade of abuse banks receive from the left, from Labour, the BBC, the trade unions and their various fellow travellers. Mostly to cover their own failings.
Firstly many people think that the banks were responsible for the failings in the British economy around 2008. This is a lie. And I have already proven so in an earlier article. It is Gordon Brown who trashed the British economy with his ignorance and ineptitude.
Next, many people are envious of, or don’t understand bank bonuses. The tradition in the City has been to pay relatively low salaries with a big annual bonus based on the profit that a person has made. This made our banks safer because they only paid out money when they made it. If an individual, using just their brains, their contacts, their phone and their computer puts together a multi billion pound deal that makes the bank (and the country) many millions then that person should get a huge bonus. If not they will just move to a different bank and do it there. Or, as has happened a lot, to a different country, where they aren’t attacked by the national broadcaster and greedy Labour politicians.
The term “bankers” is used to cover a huge range of financial services vital to the UK economy which employ over 2 million people. Many of the services provided – ATMs, bank accounts and mortgage lending for example – are essential to day-to-day life. Others support our nation’s businesses as they market products and services across the globe. Others are services provided to businesses, governments and individuals in every country in the world, which brings great wealth to this country.
The UK has the leading share of trading in many international financial markets such as foreign exchange trading (41% of the global total), OTC derivatives trading (49%), cross-border bank lending (17%) and international insurance (22%). The UK is also the leading European centre for investment and private banking, hedge funds, private equity, exchange traded derivatives and sovereign wealth funds.
The benefits of this incredible success improve the quality of life of everyone in Britain. In 2013 UK financial services had a trade surplus of £61bn, enough money to build 100 large hospitals. They paid a total of £65bn in tax, including corporation tax of £6.5bn and employment taxes of £28.4bn. When you consider that the TOTAL income tax paid by EVERYONE in the UK is £160bn you can do some interesting maths. Basically without the tax paid by the financial services industry the rest of us would have to pay around 50% more income tax.
It isn’t just by paying far less tax that we benefit. Loans from major banks to UK businesses are over £450bn, 37% of which was lent to SMEs, 80% of the finance of this sector. UK asset managers and insurers own £1.7 trillion of shares and bonds issued by UK companies. With Public Private Partnership more than £50bn has been invested in developing over 700 public infrastructure projects across the UK, including 140 hospitals. Basically our bankers make everything work. All the goods, all the services, whether provided by capitalism or government, are in some way enabled by bankers.
The banks and the bankers are utterly amazing and we are incredibly lucky to have them here in the UK.
Now, for the benefit of lefties I will repeat what I wrote earlier about Gordon Brown and the banks:
The bank “rescue” orchestrated by Brown was abysmal. Under capitalism the shareholders and bondholders pay for a management failure. Under Brown’s cronyism the state paid. A Scottish prime minister throwing (mainly) English taxpayer’s money at Scottish banks to save Scottish jobs. Look at Washington Mutual to see how it should have been done, with assets valued at $327.9 billion, that went bust in 2008 with capitalism sorting out the mess.
Also worth noting is that the headline figure bandied around for the bail out is £500 billion. Another lie. The RBS Group raised £5 billion in preference shares and £15 billion in ordinary shares. HBOS and Lloyds TSB together raised £17 billion, £8.5 billion in preference shares and £8.5 billion of ordinary shares. So £37 billion in total. An amount that was then a little over two weeks of the average spending for the UK government.
Finally, every time you have an attack of bitter leftie envy remember these figures from government statistics:
- average rates of tax were 11.3% for basic rate taxpayers, 22.8% for higher rate taxpayers, and 39.8% for additional rate taxpayers.
- the upper 50% of taxpayers by total income accounted for a 75.7% share of total income and 89.4% of tax liabilities.
- the top 1% of taxpayers by total income accounted for a 11.2% share of total income and 25.1% of tax liabilities.