money | ukwatch.net

House repossessions rising sharply

tim — Mon, 26 May 2008 21:22:50 +0000

Figures released by the UK Ministry of Justice (MoJ) on May 9 showed a marked increase in homeowners facing court action for repossession of their homes. The figure of 37,740 for the last three months was an increase of 17 percent on the last quarter and a 20 percent increase on the figures one year ago.

Repossessions have risen in most of the English regions. The figures indicate that lenders are quicker to resort to the threat of court action. A press release issued by the housing charity Shelter explained that at the time of the last housing crisis in 1991, there were 2.5 court actions initiated for each repossession that went ahead. Last year the figure was five.

Adam Sampson, Shelter’s chief executive, stated: “The worst fears of thousands of homeowners are now becoming a tragic reality. Mortgage lenders should be helping homeowners stay in their homes, but with some, it’s a case of miss a couple of payments and you’ll find yourself in court.”

Shelter estimates the likely total number of repossessions this year will be around the 53,000. During 1993 at the height of the economic turndown, figures for repossession peaked at just under 60,000.

The Citizens Advice Bureau (a charity offering advice to people, especially on debt) issued a statement in response to the MoJ. It said: “We have seen a very sharp rise in the number of people coming to us with mortgage arrears, and evidence that in too many cases lenders are using court action as a first rather than last resort.”

A BBC2 “Newsnight” report by Paul Mason featured a regional breakdown of the figures finding a correlation between the numbers of repossessions and falling house prices. They showed an increase in repossessions of 23 percent in the West Midlands, 32 percent in Lincolnshire, 37 percent in South Wales and 44 percent in North Wales. In each case house prices in the regions were markedly down. The only region to buck the trend was London, where repossessions were slightly down and house prices were still rising.

Repossessions in Shrewsbury were up 111 percent, Haverford West up 91 percent and Skegness up by 76 percent. All were low income towns. Families who had struggled to get on the property ladder were now coming under pressure. Adam Sampson interviewed for the programme said that vulnerable families now being hit by job losses, sickness or marital break-up were under threat.

The programme made the point that the last time repossessions were as high was in the economic downturn of the early 1990s, but the big difference was that we are not seeing unemployment significantly rise yet. But it is clear that job losses are increasing. The Chartered Management Institute has just reported an increase in the number of managers who are being made redundant. The figure is up by three percent on last year.

Savings levels, which have historically been low in Britain, have fallen dramatically. According to a report from Call Credit, the reference agency, millions of families are using what savings they have to survive in the face of rising mortgage payments food and fuel costs.

Those who have no savings are sinking further into debt. Debt agencies report an increase in the number of professional workers in well-paid jobs who are turning to them for advice. Community Money Advice, a charity which provides advice throughout the UK, has experienced an 85 percent increase in clients.

“The rise is huge because of the big increase in middle class debt,” said Jane Elliot, coordinator of Transact the umbrella organisation for debt advice services.

For the moment those in well paid jobs are managing to hang on to their homes. But they are disappearing beneath a mountain of debt. A further increase in the number of repossessions is likely as the impact of the credit crunch deepens. Sections of the population who would once have thought of themselves as financially secure are increasingly being drawn into the morass.

A Shelter report issued in January of this year showed how the crisis in the finance industry is impacting on house repossessions. They note “dramatically rising house prices have made home ownership less affordable to the majority of first-time buyers,” which means people borrowing many multiples of income to finance the purchase.

The sub-prime mortgage sector is not as big in England as in the United States, but the report notes that “levels of repossessions in the sub-prime sector are 10 times higher than in the mainstream sector.”

The report also pointed out the growing trend of people with multiple debt problems re-mortgaging in an attempt to simplify and resolve their debts. The report says that “Households who are experiencing financial difficulty can face a barrage of aggressive marketing encouraging them to address their debt in some way. These arrangements are often debt consolidation loans … converting an unsecured, low priority debt into one that can result in the loss of their home…. Shelter advice workers report that the party seeking possession of the client’s home is increasingly a second charge lender whose charge on the property can amount to as little as a few thousand pounds.”

Figures issued by the Royal Institute of Chartered Surveyors (Rics) show house prices falling across the country, resulting from a fall in demand. Around 40 percent less mortgages were issued over the last year than over the previous year. The Halifax bank (a leading mortgage provider) is expecting prices to fall a further 10 percent over the next couple of years.

Ian Perry, a Rics spokesman, told the Independent, “The real issue is the collapse in the number of housing transactions, which has very real implications, not just for the property industry but also the high street and the wider economy.”

In spite of recent Bank of England interest rate reductions, mortgage lenders are becoming increasingly reluctant to sell mortgages to people, reflecting fear of the still ongoing impact of the sub-prime crisis in America which has led to the credit crunch and the severe tightening of money supply.

A recent BBC TV programme, “The Truth about Property,” explained that a year ago there were around 15,000 mortgage products on offer. Today the figure is 4,000. Also lenders are demanding big deposits and in most cases will not lend more than 90 percent of the value of the house. The programme featured Simon Elkin, married with two children and earning a good salary of £50,000-plus as a wedding photographer. He had savings and a good credit record, yet was unable to obtain a mortgage.

A growing phenomenon is the rise in so called Mortgage Rescue companies. They offer to buy houses from people in difficulty or under threat of repossession. The Shelter report says of these schemes that “advertising is often misleading, implying that borrowers can stay in their homes on a long term basis … the company will buy the property at a price far below full market value and rent it back to the former owners on an assured short hold tenancy that gives minimal security of tenure.”

Currently these types of schemes are unregulated. The tightening of the mortgage market is also affecting people who took out mortgages to produce rental income, which mushroomed over the last few years. Many people bought property as a secure income for the future. They are also subject to the tightening of the mortgage market and when mortgages are due for renewal end up with more expensive ones, often costing more than the incomes they get from rents. These properties can become subject to repossession, leaving the tenants with no home.

Attacks on the welfare state that began under Thatcher and were enthusiastically endorsed by Labour have hit housing provision. Currently mortgage holders, who through loss of job, illness, etc., are forced to turn to the state for financial support may be entitled to help from the Income Support for Mortgage Interest (ISMI) scheme. The Shelter report of January 2008 shows how this has been eroded. “This safety net was cut back in stages as a reaction to the rapid rise in claims,” the report explains, “during the housing market crash of the early 1990s. The ability of the current safety net to deal with the effects of economic recession, or a collapse of the housing market, is untested. Many fear that the current arrangements would lead to significant hardship and rapid rises in repossessions.”

When the government cut back on ISMI, the expectation was that people would be able to rely on Mortgage Payment Protection Insurance policies. But only a quarter of mortgages are covered by these insurance policies. Those without protection tend to be the less well-off. Also the report notes, “Payment protection insurance policies in general … have been criticised for being inadequate, because they do not cover many common reasons for falling behind with payments …”

Also under attack over the last three decades has been the provision of social housing. Currently around four million people are on the waiting lists of councils or housing associations. A Local Government Association (LGA) report published May 16 expects this to rise to five million by the year 2010 and that around 50 percent of councils cannot meet current demand.

“With the banks overstretching their credit facilities,” Paul Bettison, LGA chairman explained, “it could well mean that in the coming months councils will have to pick up the pieces as people end up on social housing waiting lists.”

A catastrophic housing crisis is unfolding, of which the government is fully aware. Labour’s housing minister, Caroline Flint, inadvertently let the cat out of the bag when a photographer caught details of a cabinet paper she was carrying. One line read, “Given present trends they will clearly show sizeable falls in prices later this year—at best down 5-10 percent year on year.”

The Money Delusion

Ellie Keen — Thu, 22 May 2008 20:27:02 +0000

We had thought that the collapse of Enron was a one-off financial hiccup and that otherwise our money system was safe and sound in the hands of the market. However, this doesn’t seem to be the case. The credit crunch and sub-prime mortgage lending crises have brought much misery to many in the US as well as in the UK. Prestigious and solid-looking banks such as Société Générale, Northern Rock and Bear Stearns have exposed the underlying weakness of our money system. These examples may be only the tip of the iceberg of the hidden instability of the money market.

In the wake of such financial turmoil one can only conclude that the world’s money system is in need of an overhaul. The system, which was created to facilitate economic transactions, is now creating economic tragedies. What was a measure of wealth has taken the place of wealth itself. What was a means to an end has now become an end.

Let us be clear. Money is not wealth. It is a delusion to think that money is wealth. True wealth is good land, healthy animals, flourishing forests, clean water, honest work, abundant creativity and human imagination. Money was designed to oil the wheels of economic interaction and to ensure that the workings of the marketplace were smooth and simple.

The purpose of money was and should be to serve the human community as well as the Earth community. However, it appears that the original purpose has now been reversed. Instead of money serving people and planet, now people and the planet are put into the service of money. Natural resources are converted into consumables to make money. Whether these consumer goods are necessary or not is irrelevant. As long as money is made, all and everything is justified; the money machine has to be kept in motion at all costs.

Of course, most of the money supply is controlled by the few; it may appear that there is never enough money to go round, but in fact there is plenty of money available to those who already have it. Yet, for the have-nots, there is always a great scarcity. For example, there is never a shortage of money for wars and weapons, but it is always in short supply for arts and education. There is not a lack of money for fashion, but never enough for food for the poor. No-one needs to ask where the money will come from to build huge buildings for banks, supermarkets, office blocks, shopping centres and luxury villas but there is never enough money to build houses for the poor.

Naturally, there is a hierarchy in money; some currencies are more valuable than others: the dollar dominates, the rouble is subordinate. If you have euros, pounds and yen you are privileged, but if you have only rupees, dinar and pesos you are powerless. You have to give 100 rupees to get £1! When you buy something with the dinar you need a hundred times more than you would in dollars and if you sell something you receive a hundred times less. If you work for a British bank in the UK, your earnings are likely to be a hundred times greater than if you do the same job for the same bank in India. This is why call-centres have sprung up in poorer countries.

If you produce Nike shoes in Bangladesh you are paid 100 times less than if you were producing the same pair of shoes in the US. Thus money is an instrument of injustice and exploitation, not merely a means of exchange.

Money favours power and power favours money. Modern ‘democracy’, in most countries, is the government of the rich for the rich and by the rich. It is estimated that this year’s US elections will cost $1billion; money speaks louder than policies or personalities.

As John F. Kennedy once said, “What is designed by humans can be changed by humans.” Money is not a god-given fixture: it was designed by us, therefore it can be changed by us. Unless we reform and redesign our money system the idea of sustainability, social justice and spiritual renewal will remain a mirage. Therefore the reform of the money system is an urgent imperative.

We will have to develop local currencies, parallel to centralised national and international currencies of the world. We will have to revive our gift economy to solve the problems of the money economy. This is the theme of the special feature on money in this issue of Resurgence. James Bruges, Colin Tudge, Peter Lang and Tarek El Diwany expose the money delusion and explore the alternatives. Let us hope that the environmental movement makes money reform an essential part of its work.

Britain’s rich get richer even as recession begins to bite

tim — Wed, 14 May 2008 23:24:01 +0000

The choice of headline to mark 20th aniversary of the Sunday Times Rich List will hardly have given the newspaper’s editor sleepness nights: “Rich Get Richer under New Labour.” The same headline would suffice for each of the past 10 years.

But this time the uninterupted growth of wealth amongst the already super-rich takes place amidst a period of extreme economic turbulence, during which the living standards of working people have fallen sharply. As Sunday Times journalist Philip Beresford’s opening gambit illustrates: “Even as the storm clouds gather, Britiain’s super-rich have never been richer.”

Not only are the super-rich utterly impervious to the extortionate recent rises in the cost of living, but their wealth grows whether economic conditions are favourable or not. While house prices in the UK have begun to fall, reports in the media detail how the rarified West London housing market of the international super-rich is insulated from such downward pressures and continues to climb—albeit at a slightly slower rate.

The accumulated wealth of those on the rich list has grown to £412.8 billion, an increase of almost £53 billion from last year. Growth has fallen by more than a quarter, from last year’s rate of 20 percent, to 14.7 percent. Of this year’s top 10, only three were born in Britain. Indian-born number one Lakshmi Mittal’s wealth grew by an astonishing 44 percent, mainly by virtue of swallowing up more international steel producing facilities through mergers. Such business manoevres usually result in consolidation and redundency notices for staff who find their jobs duplicated.

In his new book on international elites David Rothkopf observes, “The rise of nation states produced national ruling classes. It would be odd if the current integration of the world economy did not produce new global elites—business people and financiers who run global companies.”

Writing in his Observer column about Rothkopf’s new publication, Will Hutton noted how Prime Minister Gordon Brown has surrounded himself with former employees of Morgan Stanley and Goldman Sachs. Jonathan Powell, former premier Tony Blair’s chief of staff, has joined Morgan Stanley and Blair himself receives a large stipend from Goldman Sachs.

The Sunday Times then addresses itself to the relatively tragic fate of British-based billionaires. Whilst the international super-rich are, in the words of the Sunday Times, “getting richer quicker,” by contrast British-born billionaires with substantial UK investments suffered from the economic slowdown far more than their international counterparts. Falls were expected in fortunes reliant upon British retail, property and investment. British-born Sir Philip Green, who owns BHS and TopShop, saw his wealth decline by 10 percent—losing £570 million in one year. Richard Branson lost £400 million off a previous £2.7 billion due in no small measure to the drop in Virgin Media’s share value. Vincent Tchenguiz, a British investor and property dealer, suffered a 76 percent fall in his wealth.

Rupert Murdoch’s flagship newspaper complains (in what will be seen as a warning by the Brown government) that “whereas we used to lead the field with the near-20 percent growth rates, our 14.7 percent increase this year seems positvely pedestrian.” Rich list lead writer Beresford points to contemporary increase of 22.6 percent in the wealth of the world’s super-rich and of a staggering 26.6 percent increase amongst Europe’s super-rich over the last year.

Beresford then complains about the new single payment of £30,000 annual tax levied on those deemed to be non-domicile (not resident) in Britain—irrespective of their actual wealth—despite this being little more than loose change for those on its list. The UK’s non-domicile rule in fact still allows the international super-rich to make London their home without paying taxes on earnings from abroad. And they pay very little or nothing on their British-based profits.

But Beresford is worried about bigger things to come. He notes that the storm clouds are gathering and worries that the super-rich have become a “convenient target,” writing, “In times of economic uncertainty, the gulf between rich and poor is rarely ignored by those looking for a convenient scapegoat.” By way of defence, the Sunday Times hails the money donated by a few of the super-rich to charity.

The degree of wealth disparity in the UK is astounding and Beresford is not the only commentator to note the increasing hostility towards the super-rich. A couple of days after the publication of the list, Dominic Lawson opened his weekly column in the Independent newspaper by stating, “If there is a bloody Bolshevik revolution in this country, I think I can guess the inflamatory pamphlet which will be waved by the people putting the wealthy up against the walls and shooting them. It will not be the Communist Manifesto. It will be the Sunday Times Rich List.”

Though decrying what he described as the “politics of envy,” Lawson states that “The 2008 edition, published just a couple of days ago, was more eye poppingly voyeuristic than ever: 110 pages of non-stop salivation over fortunes which the rest of us could only dream about.”

He then notes that the Archbishop of Cantebury, Rowan Williams, was interviewed only days prior to the rich list publication, telling BBC interviewer John Humphreys, “The more you have a disproportion between what people are earning and what they are worth, the more we have astronomical sums with no clear rationale behind them, the less credibility the whole thing has.”

Williams added that the enormous disparities between the super-rich and ordinary working people brings about “a degree of envy and cynicism … that leads people to feel alienated from the rest of society.”

Lawson’s derision is not directed against inequality, but at those like Williams who presume to draw attention to the elephant in the room. The Archbishop’s sin is to make the obvious connection between the gargantuan wealth accumulated at the one pole of society with the increasing immiseration and insecurity at the other. Willliams, writes Lawson, “is one of those who believes that over the past decade under New Labour the least well off have got poorer as the rich got richer, and that the latter fact is in some way responsible for the former.”

Lawson spends the rest of his column arguing that inequality, regardless of repeated academic research findings, is not really growing. And besides, he pleads, any attempt to redistribute wealth through taxation is self-defeating.

But such statements—the mantra of Thatcher, Blair and Brown—ring increasingly hollow. In the UK millions of working people live a life of perpetual financial insecurity and crippling debts. They suffer the daily ignonimy of waiting nervously for the latest bank or mortgage statement, or looking on as petrol gauges and pay-as-you go utility meters tick over. Newpapers, even the upmarket broadsheets, are full of advice for readers about how to tighten their belts, how to reduce debt and avoid bankruptcy or how to save money on household shopping and utility bills.

While house prices rose and credit was readily available, the Labour government and a supportive media was able to dazzle sufficicent numbers of people with the illusion of rising living standards. No longer. Gordon Brown has constructed an economy built on unsustainable levels of debt. Not for nothing did Guardian economics editor Larry Elliott call his book on Blair and Brown’s economic policies Fantasy Island. That some commentators are now worried by the vulgar worshiping of money represented by the Sunday Times Rich List is out of fear of the social and political struggles that will inevitably be provoked by the onset of recession.

Back to the 1980s

Ellie Keen — Thu, 13 Mar 2008 00:20:07 +0000

Anyone hearing business and enterprise minister John Hutton this week might be forgiven for thinking they’d been transported back to the 1980s.

All you’d need to complete the picture is Kylie Minogue’s dulcet tones on the radio and Harry Enfield’s Loadsamoney sketch on telly every week.

Mr Hutton, in case you’re wondering which millennium we’re in, has been waxing lyrical about ambition.

Greed is good, he almost said. What he did say was that there’s no conflict between aspiring to the lifestyle of the super-rich and tackling child poverty: ‘Our overarching goal that no one should get left behind must not become translated into a stultifying sense that no one should be allowed to get ahead.’

Having just seen my team of super-rich so-called footballers thumped 4-0 three times in succession, I’m not so sure about the value of celebrating huge salaries.

A few months on jobseekers’ allowance would do them the world of good.

More to the point, there’s simply no evidence that the poor are held back because the rich can’t fulfil their ambitions.

That’s classic trickle-down economics: if you have more money than you know what to do with, it creates jobs for butlers and valets.

People thought the slave trade was justified because it created jobs, too.

Mr Hutton declared this week that ‘any progressive party worth its name must enthusiastically advocate empowering people to climb without limits.’ So we should stop bashing the rich.

But ‘bash the rich’ is a slogan I haven’t heard since the poll tax protests. And as Tony Blair has demonstrated since resigning as prime minister, the Labour Party can be as good a road to riches as any.

Yet policy after policy leaves the poor in poverty. And an important paper from the Joseph Rowntree Foundation this week showed how far we need to go to solve that conundrum.

The paper investigated whether people-based or place-based policies were most successful. Its conclusion was that we really don’t know.

Some programmes aimed at the poorest, such as Sure Start, appear to have been hijacked by the ‘less disadvantaged’, it reports (there’s ambition for you).

Others have made a difference, but how much is impossible to tell because there hasn’t been any rigorous assessment of what would have happened otherwise.

Anyone who walks the streets of our poorest areas will know that it isn’t the tax burden on the richest that holds back progress.

It’s the scarcity of support for the frontline services and community organisations that help to generate ambition and aspiration where there is none.

London: Capital's Capital

Ellie Keen — Thu, 13 Mar 2008 00:05:45 +0000

The reaction from much of the press to government plans for the City of London’s non-domicile super-rich might make you think they were about to hand control of the square mile to the RMT. The outrage from non-domicile fat cats was coupled with threats to leave Britain altogether and for a raft of bizarre claims that London-based capitalists were being driven out of the country. Digby Jones, once CBI boss and now Gordon Brown’s trade and investment minister, publicly turned on the rest of the cabinet when he said that the policy has caused “non-doms” to ask, “Does this mean they don’t want us?”

The proposal is for non-domicile capitalists in Britain, but “resident” elsewhere on the planet, to pay either a one off sum of £30,000 or have their overseas income declared and taxed. The non-domicile law was introduced 209 years ago as an incentive to those who had benefited from the spoils of imperial conquest; who they had pillaged remained a private matter of conscience.

The recent proposal actually originated in Tory HQ before autumn’s election-that-never-was after a YouGov poll had shown it to be a big vote winner. Seeing this, Gordon Brown quickly nabbed the policy as his own, not realising that he might have to stick to the commitment even if he managed to dodge an early election.

Considering there is currently £120 billion held by British business in overseas trusts, this doesn’t sound too controversial – even the US already has similar tax structures in place. Yet when the hapless Alistair Darling attended a recent bash held by the “Worshipful Company of International Bankers” (a Livery Company of the City of London – more on these later) at which he eulogised in his speech about how great and good the super-rich are, the reaction was an attack on government tax policies and regulation from the Lord Mayor of London and for the 450 diners to bang their tables and jeer. There followed a series of U-turns as the chancellor “clarified” (ie watered down) his position. Even London Mayor Ken Livingstone – who has noticeably steered clear of the row and received only warm applause following his own fawning speech during the same dinner party – now genuflects to the City. “There isn’t an ideological conflict any more,” he said in an interview with Prospect magazine in April 2007. “The business community has been almost depoliticised.”

Undemocratic

Livingstone and his advisers lobbied heavily for Crossrail, the commuter rail link to ferry City workers from the Home Counties largely at the expense of residents and taxpayers, while his economic adviser, John Ross, has been defending the obscene profits, payrolls and bonuses of hedge fund managers.

The position taken by government towards the City has always been one of kneeling before it. This has made Britain in the words of the neoliberal International Monetary Fund (IMF) a tax haven, due to the way in which City authorities actively assist businesses to avoid tax. (In a telling show of arrogance, the Treasury financial secretary, Jane Kennedy, retorted that the methodology used by New Labour’s usually beloved IMF was therefore “seriously flawed”.)

But the City is more than just a tax haven. To really make sure that there is nothing in the way of wealth accumulation, several elements of regular local authorities must be kept at a distance. These elements include democracy.

In a parliamentary debate in November 2002 the then Tory MP (now New Labour minister) Shaun Woodward said: “The City of London is indeed unique – unique in its national role, in its size, its population, its local finance, its responsibilities, its work in the arts and its charitable work. The City is unique too, in having an electoral system that was unaffected when, in 1969, the non-residential vote was abolished for local government elections.” (Incidentally, it was Labour chancellor James Callaghan who argued through this exception to the rule.)

Woodward was certainly right about the uniqueness of the City of London – it is the most undemocratic local authority in Britain. While the 7,800 residents of the square mile have the vote, business based in the City can appoint a further 32,000 voters. In November 2002 a private act of parliament, submitted by the City of London itself and gushingly (and arguably unconstitutionally) endorsed by Tony Blair, doubled the business vote from 16,000. But it doesn’t stop here.

The City of London Corporation is governed by three institutions: the Court of Aldermen, the Court of Common Council and the Lord Mayor. Residents and business are allowed to vote for the aldermen and the Common Council, but only “freemen” are able to stand for election. You can become a freeman either by “servitude” (apprenticeship to another freeman), by appointment by the part-ceremonial, part-business associations of the Livery Companies, by heredity, or by payment of a £30 “freedom fine” (if the sitting Common Council accepts you). If you want to be an alderman you must also have the blessing of the Lord Chancellor. The Lord Mayor must have previously been a sheriff, and sheriffs are appointed by the Livery Companies. Additionally, standing under a party banner is severely frowned upon. This basic structure has existed since AD 886, and was preserved by William the Conqueror to maintain a degree of autonomy for European merchants.

All public expenditure comes from the interest earned on the corporation’s billions of pounds of wealth, hoarded away over centuries. And just to make sure this “better than everyone else” attitude continues, it runs two private schools for the wealthy (one for boys, one for girls), and the City of London Academy school in Southwark (with its own City run curriculum of business and commerce) for everyone else.

But this is more than just another Great British anachronism – it ensures that the City is not held up to any unnecessary accountability. A democratic system might, for example, block the building of a new skyscraper or insist that the amassed wealth held inactive in its vaults be put to better use.

So with local and national government on side the City has a free rein. In 2007 City bonuses hit £14 billion, a figure equal to annual national spending on higher education – and this was up from £10.9 billion in 2006. The rationale for all this, of course, is that wealth then trickles down through the economy. But a brief look at how the City treats its own workers puts the lie to this myth (and by “workers” I mean waged labourers rather than those paid to make a few phone calls between checking the size of their wallet).

Barclays’ 2007 profits were £7.08 billion. But the people who clean the bank’s offices are paid just £7.50 per hour. Meanwhile, Goldman Sachs (or “Golden Sacks” as it is often known, owing to its obscene bonuses) part-owns cleaning contractor ISS who pay their workers just £5.60 per hour. Marsh, the world’s leading insurance broker, recently suspended 12 cleaners in its City offices, contracted out from ISS, for demonstrating against poverty pay (only after completing their regular 12-hour shift).

There are 20,000 cleaners working in the City on similar wages, yet average pay across the board stands at £971 per week (£600 more than that of Devon and Cornwall). If the wealth has trickled down, the cleaners have obviously not managed to mop it up.

The City boasts of its contribution of 10 percent to Britain’s gross domestic product. This, it claims, means it should be a special case when it comes to taxation. But what good is this contribution to the economy if even the people at its heart, vacuuming the floors and cleaning the computer screens, are paid up to £2 per hour below what Ken Livingstone himself considers a living wage? What good is having the richest square mile on the planet if the government claims poverty when it comes to paying the public sector? What good are champagne-quaffing City boys when in Tower Hamlets, a step over the border to the east of the City, two thirds of all children live in poverty?

As profits in the City increase, so does the gulf between rich and poor, and as the rich purchase obscene levels of housing as investments and drive up prices elsewhere in the capital, it is the rest of us who have to tighten our belts. And it is important to remember that they are rich through lending, earning interest and gambling with money we as workers struggle so hard to produce. So the argument that asking for a few crumbs from the Livery Hall banqueting tables will cause the rich to leave the City is like arguing that you shouldn’t ask someone to stop punching you in the face because if you do they might stop punching you in the face so hard.

New Labour’s attitude to the City is unsurprising. “True to his neoliberal belief in the market Gordon Brown has allowed the worst excesses of corporate greed to let rip in the City,” John McDonnell, the only MP to attempt to challenge Brown for the Labour leadership, told Socialist Review. “For a decade under New Labour finance capital has been given a free hand to profiteer at the expense of many who have lost their jobs, savings and pensions through City speculation. By turning a blind eye to the award of obscene levels of City payoffs and bonuses Brown has created a scale of inequality in our society not seen for three generations.”

Lindsey German, the Respect candidate for Mayor of London and the London Assembly, said, “It’s time the government stopped giving such a favourable tax burden to the City. We’re always told that if they are taxed any more they will go elsewhere.

“My attitude is that if they’re going to use blackmail then let them leave the country, and see how well they get on somewhere else. If we want to pay for transport and housing in London then the City is the obvious place the money should come from.”

The City of London is, of course, the real constituency being represented by Brown. His arrogant belief that unbridled capitalism will bring an eternal boom for the benefit of the country has led to the City being allowed to do as it likes.