We discovered in mid-February that bail-out bank Royal Bank of Scotland is set to pay taxpayer-backed bonuses worth up to £1.1bn to its staff. Bail-out bank Lloyds Banking Group is paying its outgoing chief executive Eric Daniels a £1.45m bonus in shares. As PN went to press, major banks were expected to offer their staff bonuses of around £6bn. On 18 February, it emerged that Barclays bank paid a mere £113m in corporation tax to the government in 2010, on global profits of more than £5 billion. Over the same period, Barclays paid £1.5bn in cash bonuses to top staff, and a further £1.2bn of longer-term awards.
The New Economics Foundation reported in mid-February that taxpayers are subsidising British banks by more than £30bn a year on top of the bail-out package that prevented their collapse. The main subsidy comes with the government’s implicit guarantee to rescue banks seen as “too-big-to-fail”. Such banks can borrow money more cheaply than companies at commercial risk. Investment bank Goldman Sachs enjoyed a bumper year for pay and bonuses in 2010, despite a 38% drop in profits, with chief executive Lloyd Blankfein receiving a 233% increase in his basic pay from $600,000 to $2m in 2011.
Staff overall enjoyed $15.3bn in pay and bonuses. Elsewhere, £160m in taxpayers’ money is to be used to underwrite a loan to a Caribbean tax haven that is struggling to pay the salaries of its teachers, nurses, doctors and police. The Turks & Caicos islands, seized by Britain in 2009, charges no income tax or capital gains tax, and is used by rich Britons to avoid paying taxes in the UK. Meanwhile, the world’s super-rich spent 53% more at Christie’s auction house in 2010 than they did in 2009, a rise to £3.3bn. Sotheby’s auction total rose by $2bn to $4.3bn (not counting private sales). Porsche sales in 2010 were up 25%. Rolls Royce sales rose 171%. At the beginning of February, the world’s largest luxury goods group, LVMH, reported record revenues for 2010: £12.5bn, up from £10.5bn in 2009.
LVMH wines and spirits experienced a 19% rise in revenues. Recovery was particularly strong for prestige cuvees such as Dom Perignon and Krug. Champagne consumption in the UK is back to pre-recession levels.
The general secretary of the TUC, Brendan Barber, said: “Bankers are toasting their telephone-digit bonuses while the rest of the country reels from more than a fifth of young people being out of work.”
Thousands of services for the disabled, the mentally ill and the elderly, and hundreds of libraries and sports centres, are to close this year as a result of cuts imposed after the financial crisis.