Remember the bewildered Lehman Brothers employees leaving their HQ with the contents of their desks in cardboard boxes? Unbelievably that was 10 years ago this week. That’s when the unthinkable happened - the banking system seized up. Cash machines were about to run out of money and people were on the verge of losing their life’s savings, even their homes. We all know what followed: the government injected billions into the banks’ coffers to give them a new lease of life and stuck us with the bill, claiming it was the bitter pill we all had to swallow.
So here’s the thing - the crash may have caused the recession but the government did not need to respond with austerity. You can also invest to get the economy going again. Cuts were a deliberate political choice, a decision to use the crisis to shrink the public sector, increase the private, and favour the interests of the rich.
As a result, the British public have suffered a decade of misery. Up and down the country, we’ve seen growing lines outside food banks, hospitals at breaking point and families worse off than they’ve been in years. Household debt is now the highest ever on record as people have been forced to borrow just to get by.
Looking back, what I find most hard to stomach is that “we’re all in it together line” - remember that? It’s truly sickening how the goodwill of ordinary folk was abused, summoning up the wartime spirit to have us all play our patriotic part in what turned out to be years of frozen wages and job cuts. It is disgraceful and heartbreaking, not to mention deeply worrying, that one in six firefighters have been thrown out on their ear in the last 10 years. And what was this appeal to our good nature designed to do? Distract attention from the true villains of the piece. It was the banks – no one else – who clobbered the country. Were the bankers made to pay? No. Do they continue to live the high life? Yes. During the last decade the Big Four banks have paid themselves more than £50 billion in bonuses.
They got bailed out, we got sold out!
But the big question, now we are 10 years on, is what’s been learnt? Have the required steps been taken to prevent this happening again? The depressing answer is ‘no’. With the system as risky as it ever was, with no fundamental changes to the rules, with the culture of gambling - rather than long-term investing – still as strong, we are as good as sleepwalking into the next crisis.
On the optimistic side, the 10-year anniversary of the Lehman’s collapse has motivated a number of groups such as the Robin Hood Tax campaign, Positive Money and Unite the Union to renew work to show how finance can be changed for the better under the banner of the 10 Years On campaign. Imagine the banking sector returning to its role as a utility that serves society, rather than the other way round. Imagine government putting in place rules to properly protect us from the risk of their unchecked activities running out of control. Imagine incentives changed to encourage the financial sector to kick their gambling habit, earning greater rewards from patient investment rather than casino activities.
Admittedly, under this government the prospect of change looks bleak but that’s because more than 50% of donations to the Conservative Party come from the City. Let’s face it: ‘whoever pays the piper, calls the tune’. You may ask what in practical terms could be done to demonstrate a better approach. Well, our particular campaign for the Robin Hood Tax is indicative of the kind of massive difference that is entirely possible. Our proposal to increase the amount of tax financial firms pay, trading such things as bonds and derivatives, was adopted as official Labour Party policy last year. Had such a measure been introduced in 2008, at the start of the crisis, it would have generated a whopping £40 billion in extra revenue, which alongside measures to clamp down on tax avoidance, would have made the £50 billion cuts to schools and hospitals entirely redundant.
Looking forward, it would generate an extra £25billion over the course of a five-year parliament, which would go a very long way to reversing the cruel cuts of the last decade, creating jobs where they are needed. Over the last few years the Robin Hood Tax has been progressing, introduced in France and Italy. Why? Because it is sensible and fair, just like our financial system could be if enough people get behind our call to Change Finance for good.
David Hillman is director of the Robin Hood Tax campaign and a spokesperson for 10 Years On, a campaign to mark a decade since the global financial crisis