Posts Tagged ‘business’
Can state owned bank bonuses be justified?
At the end of a couple of weeks when there has been pressure on the Government to intervene in the row surrounding bonuses owed to senior figures at Royal Bank of Scotland, and also seen former chief executive Fred Goodwin stripped of his knighthood, bankers’ bonuses is once again dominating headlines.
Goodwin was honoured for services to the banking industry, though was also the man at the helm as the bank suffered record £24bn losses which resulted in a taxpayer-funded bailout of the bank.
That decision came after political pressure led to both RBS chairman Sir Phillip Hampton and chief executive Stephen Hester waiving their right to bonuses which collectively were worth more than £2.36million.
I’ve personally never understood how the bonus culture amongst bankers can be justified. It’s not uncommon at many large private organisations for annual performance related bonuses to be paid out, but the astronomical figures that are so commonly reported as being on offer at the major banks give the impression of a perk which is simply taken for granted.
According to a survey published by Astbury Marsden in November, the expectation amongst professionals in the City was for an average 2011 bonus approaching £20,000, a figure that is more than a significant number of people’s annual salary. Such bonus expectations were in addition to average pay rises of 12%.
Overall, bonus payments in the banking industry run into the billions of pounds each year, and although there has been a reduction in recent years to the levels of payments during the peak of 2007-08, there was still a total of £14bn paid out for 2010.
To justify the bonuses, an argument is made of how much the country relies on the financial services industry and its need to attract, and retain, the best talent available.
But while the banking sector is clearly of huge economic importance, it is just one of many areas without which the nation would struggle to function.
How would the country look if its financial services sector was thriving, but had a completely dysfunctional health service, a severe shortage of police officers or firemen, and no adequate postal service to speak of?
All of the above are fundamental services and any stance which is adopted by bankers in which they suggest that they are the most important people in society, fully deserving of not only a bumper salary to do their job in the first place, eclipsing that of most professions, but also a hefty bonus on top is one of extreme arrogance.
Surely the salaries themselves are enough of an incentive? Certainly if I was paid a six or seven figure salary to do my job, I’d consider that in itself to be the reward for the work I was doing and an adequate reflection of the work and responsibility involved.
If the salaries are not enough, then the bankers should consider the fact that without a public bailout which industry mistakes led to the need for, the banks would not have survived. The shared responsibility of correcting those mistakes and returning the banks to a healthy position should be enough to concentrate on in the meantime.
No accountability for MPs?
The recent news that the government has scrapped a news NHS IT system has unsurprisingly caused a lot of anger.
Not anger caused as a result of abandoning a project which has been doomed to fail for some time, but anger at the amount of money thrown away on the scheme already.
Of the £12bn total cost of the system, at least £2.7bn of public money had been spent as of last month.
It’s a huge amount of money under any circumstances, but particularly so when the economy is struggling and when a process of cutting NHS staff is already underway.
To illustrate the scale of the waste, it would be enough to pay a £25,000-a-year salary to 21,000 NHS workers. For five years.
In most sectors of employment, the people most responsible for making such catastrophic decisions would find themselves looking for work, probably nursing a severely damaged reputation. Something which seems not to apply to those running the country.
Sure, we’re all capable of making mistakes, and we can’t expect our MPs to be perfect. They have difficult jobs, despite half of the country believing they could do better.
But when mistakes are made by a government on such a scale, is it not right that those at fault are held to account rather than carrying on regardless, taking no responsibility?
It was a similar story with the failed FireControl project which intended to replace local rescue control rooms with nine regional control centres across the country.
Only one has been used, with the rest lying empty but still costing £4m a month to maintain. Almost £500m will have been wasted on the project in total.
Again there is no-one being held accountable for the disastrous outcome, and highlights how utterly untouchable those in government currently are.
Parliament endorsed prison sentences for looters involved in the rioting, though when many MPs themselves were guilty of theft – though obviously not officially described as such – they offered a quiet apology, gave back some of what they had taken, and then hoped for the fuss to die down. Which it duly did. Only two MPs found themselves jailed.
It’s time that our MPs were treated the same way as any regular person on the street when they get things so badly wrong.
And not many of us would stand a chance of getting away with explaining to the boss that we’d just wasted £3bn of company money.
The rising cost of heating up beans.
So British Gas have announced further rises to their energy prices.
The most pleasing aspect was that it made so much news coverage on the radio, that I was actually able to know about these rises in advance. Without such coverage on BBC’s finest, one wonders whether customers of British Gas would be told at all.
Despite the increase though and the criticism that has been aimed at British Gas, I will jump ever so slightly to the defence of the company by pointing out that in the three years since becoming the proud, but cash-strapped owner of my own home, I’ve also benefited from sizeable energy price cuts too, at times when wholesale costs have been lower. Not too many companies pass on savings to the customer which they themselves are benefiting from.
It’s also true that while British Gas are generally the subject of more negative headlines than their rivals, those very companies are never far away from increasing their own energy prices.
So for the meantime, I shall remain a customer of British Gas. And continue to enjoy hot beans.
The Apprentice: Week 8
The Apprentice has thrown up very few surprises so far, but as the process moves into its final weeks, it is at least becoming more interesting.
Last night’s episode saw the candidates head out to Paris, hoping to make sales of some supposedly classic British products. Sure, the products in question may not have currently been available on the French market. But other than a light shaped in that most British of items, a teapot, nothing else was capable of being marketed as a product with a natural association with Britain.
In any case the teapot lamp sold badly, and Logic, the team who chose the product, were duly given a mauling when the sales results came in.
As to who would take the blame, it really could have been any one from the four team members, though I was pleased to see Tom given a reprieve. Considering the number of tasks he’d lost, he’d obviously done something right to avoid a single boardroom encounter with Lord Sugar.
The boardroom was something he wouldn’t be able to avoid last night, as the team leader, but while his mistakes during the task were evident, it’s also true that a number of his colleagues have been given an opportunity to remain in contention, and to learn from their mistakes. It was pleasing to see Tom afforded the same luxury.
However, I was surprised to see Melody get away so lightly with a contribution which went beyond selfish. A manipulation of the market research in order to suit her own personal dislike of a product which she hadn’t even seen in person was largely overlooked, even though the product in question was ultimately that which secured victory in the task for the other team involved.
Her refusal to share out appointments which she had secured could also have been seen in a poor light, but Lord Sugar instead saw the positive in such approach, and warmed to her determination to win. The team’s leadership may have been weak in allowing her bullying to succeed, but others in the current series have already been shown the door for displaying characteristics deemed unsuitable for a business partnership with Lord Sugar. Clearly Melody’s selfish approach to a team task is not as unforgiveable as many viewers may have hoped, and I suspect she will be around for some time yet.
With team numbers smaller, there have become fewer hiding places and Leon was helpless but to admit an almost non existant contribution. While he too was guilty of being overrun by Melody who did, out of the kindness of her heart, “allow him to have” the final sales pitch on her list, he has also been guilty of being given a few earlier warnings during the eight weeks so far.
He was never likely to get away with another one, and was handed a cab ride home.
