On Monday 23rd November I addressed delegates at the Finance and Legal Sector conference of Unite the Union on the subject of the finance sector.
You can watch my speech here and the transcript is below.
Richard Burgon speech to Unite Finance Sector conference
I would like to thank you for inviting me to speak to you today.
This is my first time returning to Brighton, since the Labour Party Conference met here in September.
That conference was the first with our new leader Jeremy Corbyn, and his new Shadow Chancellor, John McDonnell.
I am now addressing you as Labour’s Shadow Economic Secretary to the Treasury and Shadow City Minister in particular.
I was proud to be asked to join Labour’s Shadow Treasury Team, and I did so because John and Jeremy made clear that Labour is now an anti-austerity party.
And I am also delighted to be here, to address you in my first speech in this post outside Parliament.
You as Unite members, the UK and of course Labour’s largest affiliated union, and also as finance and legal sector workers.
Let me be clear. The UK finance sector is vital. To the UK economy. And it is of course, of global significance.
Financial services make up 8% of the UK’s economy, contributing over £120bn a year to GDP.
But the UK is also of global significance. 500 world banks, situated in The City amongst the headquarters of some of the world's largest banks - Barclays, RBS, Lloyds, HSBC, Standard Chartered.
The sector and its institutions form a vital transmission belt in the economy, connecting businesses with the funds they need, and enabling families to plan their expenditures.
Or it should do, if it works properly.
But we are still dealing with the effects of the crash.
Seven years on, earnings are still 8% below their peak. Loans to small businesses have fallen and fallen.
And that is why Labour's new leadership and our new Shadow Treasury team is at the forefront of challenging economic agenda that lingers on in the Conservative Government - if nowhere else - today.
When the economic crash hit in 2008, Labour shored up the economy and rescued key financial institutions.
Through public intervention to bail out the banks, and through quantitative easing to ensure sufficient finance in the economy.
Labour intervened, put money in, and stabilised the situation. Before the 2010 election, the economy was growing once again.
But we were reaping the whirlwind of the previous decade or more. We had forgotten that our financial services are essential part of the modern economy – an essential utility, like water or electricity.
Instead we were lured into believing that if a handful of the most senior financiers were pocketing large bonuses, the rest of society would somehow benefit.
The consequences should have been obvious. As last week’s damning report on HBOS revealed all too clearly, poor, greedy management reinforced by a regulator that was unable – or unwilling – to regulate led to disaster.
But let’s be clear. The financial crisis was the fault of senior management decisions and poor regulatory oversight. It was not the fault of the thousands of workers in the financial industry who continue to perform an essential job.Unfortunately, we lost the election, and as we turned inwards - a lesson we should learn today - the Tories stole a march and set about asserting an explanation for the crisis that suited their ideological ends.
So the public have been told at length the deficit caused the crisis, not that the crisis caused the deficit.
And the Tories have spent five years making the case, and delivering it, to cut back spending and shrink the state.
They've done so because it suits their ideological agenda, not because it makes economic sense.
The result? For the economy, the slowest recovery on record, low investment, huge corporate savings, a return to the bonus culture for a tiny few at the top.
And for ordinary people? Huge job cuts, particularly in the public sector, stagnating wages, reduced benefits, longer hours, more stress, more foodbanks and more misery for millions of people.
That is what Labour is now challenging. As we take on the thinking behind the fiscal charter and tax credit cuts - as we have in Parliament recently - and the further cuts to our public services and local authorities, that the Chancellor will announce on Wednesday.
Austerity across the whole economy has seen jobs cut, wages stagnate, investment slashed and profits and bonuses for those at the very top continue, essentially as business as usual.
Austerity has had the same impact in your sector.
Finance has not been delivering for the economy or the wider electorate and, as some of your members have told me, not for finance employees either.
Report after report in recent years that banks are not sufficiently supporting small and medium enterprises.
They are instead increasing their savings and sitting on piles of cash which could help the economy.
There is now a growing and welcome debate on the failure of major financial firms to invest.
And we know also that financial firms are not sufficiently investing in local communities, or in their own hard-working local employees, including you here today.
Local communities are losing out on vital local banking services.
We know bank branches create and sustain wealth and jobs in but branches are being shutdown to prioritise profits.
NatWest and RBS has shut 385 branches in 2014 and 2015, which is more than one third of the total 1,150 branch closures across Britain.
Of these, 165 have been the last bank in town.
Even the village bank in Knott End-on-Sea, Lancashire, which starred in one of the NatWest TV adverts, was closed down earlier in the year.
This is not acceptable.
And with branch closures come staff cuts.
The impact of austerity on finance sector has hit ordinary staff in the sector, meaning thousands have lost their jobs and thousands more have found their job more stressful and more difficult to do.
There are around 180,000 fewer workers in the UK-led financial sector since 2007, with our biggest banks shedding jobs at home and abroad.
In RBS, we have seen more than 70,000 posts cut, 60,000 at HSBC, 30,000 at Lloyds and 20,000 at Barclays.
And we continue to hear new announcements of new job cuts.
These job cuts have an impact on real lives, which we know because Unite has stayed in touch with its members in the finance and legal sectors.
Unite’s research and member surveys paint a clear picture of the challenges staff face.
The intensity and the volume of work for those remaining has increased significantly leading to increasing levels of stress and sickness absence.
Unite’s recent survey of members in the sector found three quarters of staff had seen job losses in their branch or department of which a majority found they had to work longer as a result.
And these are often additional hours worked over and above their contracted hours that are not paid overtime.
Unite has been right to express concerns over an earnings and bonus culture which rewards high risk strategies and failure at the top, while dispensing severe penalties for ‘failure’ to those lower down the organisation.
So there we have it.
A dysfunctional financial sector, that doesn't deliver for the economy, doesn't deliver for the electorate, and doesn't deliver for its own employees.
The Labour Party wants a thriving and dynamic finance and legal sector that will best deliver for the economy and the electorate as a whole.
We want to see a change in culture and practice at the top of the sector that can deliver confidence from the wider public.
That's why we have urged the Government to adopt proposals to deliver tighter regulation.
Before the election, we backed the Independent Commission on Banking call for ring-fencing of retail banks, to protect ordinary users on the high street, which the Government is still watering down and dragging its heels on.
We urged a Bankers Bonus Tax and backed the Parliamentary Commission on Banking Standards call for bankers pay to be linked to long-term performance.
And we called for a British Investment Bank to ensure the finance is there, even when other private banks continue to limit their lending, as Tomlinson found.
So we urged change at the election, but to re-establish trust, we need to go further.
Last week's announcement that 10 HBOS executives may be barred from business shows we are still uncovering the depth of problems in finance and the culture that existed at the time of the crash.
And the announcement of the former Northern Rock mortgage sell-off from the government's own UK Asset Resolution to the US private equity firm Cerberus, shows that George Osborne is not the man to make the necessary changes.
We have criticised the Government's sell-off agenda for the bailed-out banks, selling off shares in Lloyds and RBS as fast as it can.
We don't oppose the sell-off for ideological reasons, we are simply asking to see the economic case for it.
The Chancellor has pursued the recent RBS sell-off with no evidence to justify it's decision, at a loss to the taxpayer, when they might form the basis of a new banking model.
We are concerned that the Government is simply returning to business as usual, without delivering the change the sector needs to see.
Since Jeremy Corbyn's election, Labour has set out a raft of new initiatives to look at how we can change the finance sector and make it deliver for ordinary people.
We have invited Lord Bob Kerslake, former head of the civil service, to bring together a team to review the operation of the Treasury itself.
We have invited Danny Blanchflower, former member of the Bank of England Monetary Policy Committee, to review the Bank of England mandate and to launch a debate on expanding that mandate to include new objectives for its Monetary Policy Committee including growth, employment and earnings.
And we will also review the operation and resourcing of Her Majesty’s Revenue and Customs to ensure that HMRC is capable of addressing tax evasion and avoidance and modernising our tax collection system.
We are doing so because we are serious about changing how finance operates in Britain, so we can ensure it works for everyone.
At the Labour Conference in September, John McDonnell said we are changing the economic discourse in this country.
And he also said that, because this is such an immense task, we need to draw upon all the talents outside and inside the party.
We want to open a national conversation about how our economy works, and how it can be made to work better for everyone here – not just the few. How our financial system operates is a critical part of that discussion. We all know how things could be better – for bank workers, for businesses, for households. But we have to shift how we think about things.
So I would like to ask you - whether like your union Unite, you are part of the Labour Party, or whether you’re outside the party but share our values – to join us in changing this debate, and in so doing, change the economic agenda and the way finance operates in this country.