July 12, 2021
On 1st July, Rishi Sunak delivered his annual Mansion House Speech to young people working in finance. Sunak announced he would not increase the 8% surcharge on bank profits in line with the proposed higher level of corporation tax – despite the fact that banks continued to profit during the coronavirus pandemic. The favourable treatment Rishi Sunak is giving to the financial sector reinforces the cosy relationship between big finance and government.
Earlier this month, former Chancellor and ex-banker Sajid Javid replaced Matt Hancock as Health Secretary. Amongst various corporate posts, Javid was paid £150,000 a year as a ‘private consultant’ to JP Morgan in 2020 – a major investment firm with vested interests in private healthcare provisions. This poses significant danger for public health infrastructure in the UK, as the former Chancellor has expressed interest in privatising the NHS.
In September, we responded to Javid’s JP Morgan appointment – highlighting the fact that he is one of many other politicians who have held prominent advisory positions in finance, including Rishi Sunak (Goldman Sachs), Tony Blair (JP Morgan) and George Osbourne (BlackRock).
The fact that so many senior and powerful government ministers have such strong links to the finance sector, puts in jeopardy the economic reforms we so urgently need.
Sunak’s preferential treatment of the banking sector comes as no surprise then, as he gives highly profitable banks a free pass in the name of creating a so-called “competitive”, deregulated City of London after Brexit. But the costs and missed opportunity of this decision are huge.
Whilst households across the country are struggling to make ends meet, bank profits are soaring. Barclays earned a whopping £611m between July and September 2020 whilst HSBC and Lloyds pocketed over £1bn each. A fair marginal tax rate to recover a greater share of these profits could raise funding for much-needed public infrastructure and green investment to kick-start the transition to a sustainable economy.
Time and time again, the government falls back on false rhetoric by denying the existence of the ‘magic money tree’ whilst reiterating the importance of paying off the deficit. But at every turn, they fail to implement policies that could rectify this and redistribute wealth to ordinary people. Despite the government’s promise to “level up”, politicians like Sunak seem unwilling to make banks, corporations and landlords pay their fair share.
Sunak’s preferential treatment of the banks rings alarm bells particularly as the COP26 climate summit in Glasgow is fast approaching. How can we possibly take the government’s commitments to tackle climate change seriously whilst they continue to offer tax incentives to carbon-intensive industries and the banks who fund them?
We cannot ignore the hypocrisy and the empty platitudes consistently peddled by the government. Sunak’s speech serves as a reminder of who’s interests the government is really working for – and it’s certainly not the British public.
This is why it’s more important now than ever to come together to dismantle the system that rewards wealth, status and privilege and build one that works for all. This will involve urgent systemic reforms to close the revolving door and ensure vested interests have no influence within government policy.