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Daily Mail
16 hours ago
- Business
- Daily Mail
David Blunkett warns Keir Starmer about scrapping the two-child benefit cap saying it will only inspire families to have more children
Work, not welfare, should pay, New Labour grandee David Blunkett has urged as he backed keeping the two-child benefit cap. The former home secretary, who grew up in poverty, said giving families more money would only inspire them to have more children. His intervention puts him at odds with the former prime minister Gordon Brown, who is leading the charge to try to abolish the cap. It will put Sir Keir Starmer under pressure as he debates whether to raise or scrap the limit, which prevents parents from claiming child tax credit or universal credit for more than two children. Writing in The Sun on Sunday, Lord Blunkett said work, not handouts, is the best way to raise families out of poverty. He said: 'Surely having children that you cannot afford to feed is the legacy of a bygone era? 'The simple and obvious truth is that child poverty springs from the lack of income of the adults who care for them. There is a limit to how much money taxpayers are willing to hand over to pay for another family's children. Helping them to help themselves is a different matter.' The Prime Minister is facing revolt from Labour backbenchers who demand the Conservative policy is scrapped. Last week, Nigel Farage said he would end it, further upping the stakes. Sir Keir has hinted that he would like to scrap the policy when the fiscal conditions allow, while his Education Secretary Bridget Phillipson has said axing it is 'on the table' as part of a child poverty review. However, factions within Labour oppose ending the cap because it is seen as fair by middle-class voters who have had to make difficult decisions about the size of their own families. Axing the cap would also cost about £3.5 billion and would need to be funded by cuts or tax rises. It would represent another U-turn by the PM, who has already backtracked on winter fuel payments and could do the same with disability benefits. It came as the welfare minister said she would not make benefits claimants take any job, prompting the Tories to accuse her of handing them a free pass. Alison McGovern rejected the Conservative policy of getting claimants to take on any work offered to them, telling The Sun on Sunday: 'The Tories used to talk about ABC: 'Any job, Better job, Career.' 'I think that if you think about the career... If we can get people into an NHS job where they're more likely to move on and move up, that is far better.' But Tory shadow work and pensions secretary Helen Whately said: 'The mask has slipped and it's the same old Labour. Those who can work, should work. To do otherwise is unfair to them, unfair to the taxpayer and unfair to society which pays the spiralling cost of worklessness.' A Labour source slapped down Ms McGovern, saying those on benefits must accept 'reasonable job offers', adding: 'There's no change in policy. The rules remain the same.' Tory leader Kemi Badenoch will order her MPs to join with Labour rebels and vote against any cuts to benefits to humiliate Sir Keir. More than 100 Labour MPs have signed a letter to the PM warning they will not support his cuts when the vote comes before Parliament later this month. He has a working majority of 165, while the Tories have 120 MPs, meaning that if enough Labour MPs vote against the plans, the Government could be defeated. The Tories would oppose the plans on the basis that the cuts do not go far enough, The Sun on Sunday reported.
Daily Mail
a day ago
- Business
- Daily Mail
I had a ringside seat as arrogant men nearly destroyed a great British bank. That dramatic tale offers a dire warning today: RUTH SUNDERLAND
One Saturday just before Christmas 2007, there was a knock at the Edinburgh home of the late Alistair Darling, who was then Chancellor of the Exchequer in Gordon Brown's Labour Government. On the doorstep, proffering a gift-wrapped panettone, was Fred Goodwin, the boss of Royal Bank of Scotland (RBS), who lived nearby. This was no social call: Goodwin had come to beg for help to keep his bank afloat. His visit was Darling's first foreboding of the catastrophe that would engulf RBS a few months later, culminating in a £45 billion taxpayer bailout.
Yahoo
a day ago
- Business
- Yahoo
Hubris, crisis and scandal: how the NatWest ‘soap opera' unfolded
Hours before the government fired the starting gun on what became a £45bn bailout of Royal Bank of Scotland (RBS) in October 2008, Whitehall was in chaos. Dozens of City bankers, drafted in to support the chancellor, Alistair Darling, were camped along the Treasury building's winding corridors, juggling laptops and mobile phones as they worked to keep the UK's financial system afloat. 'It looked a little bit like an under-stress NHS hospital,' Charles Randell, the government's former legal adviser, recalls. And time was running out. The Labour government, then led by Gordon Brown, had begrudgingly nationalised Northern Rock a year earlier and watched in horror months later as a string of US banks, including Lehman Brothers, went under. RBS bosses including its chair, Tom McKillop, had been summoned to Downing Street and were told that the government would be taking majority ownership in what was then the world's largest lender. There was initial disbelief and then acceptance that their charming but ruthless chief executive, Fred 'the Shred' Goodwin, would have to go. Ministers worked fast over the weekend, knowing there would be consequences if they failed to finalise the bailout by Monday morning. Some even feared that customers, queueing to take out their cash, could turn violent. 'Who knows whether it would have been necessary to bring the army,' says Randell. 'None of that was unimaginable.' At 7am on Monday 13 October, Brown unveiled an 'unprecedented but essential' bailout plan, pumping billions into RBS, as well as into Lloyds, which had recently taken over HBOS, to prevent a financial meltdown. Two subsequent financial injections eventually left the taxpayer with an 84% stake in RBS. 'I recall telling Alistair Darling it could take us 20 years to get the state out of RBS,' says John Kingman, who was then one of the most senior civil servants in the Treasury. He was not far off. It has taken nearly 17 years for the lender – now known as NatWest Group – to fully return to private hands. The government confirmed on Friday that it had sold the state's final shares in the lender, albeit at a £10.5bn loss to the taxpayer. RBS's near-collapse followed a series of acquisitions under Goodwin that had fuelled its rapid international expansion. He followed a £21bn deal to buy NatWest in 2000 with agreements to buy the British insurer Churchill from Credit Suisse, the German credit card business of Santander, and Ireland's First Active, as well as a string of small US banks. The hubris continued, with Goodwin spending £350m to build a lavish campus on the 45-hectare plot of a former psychiatric facility at Gogarburn on the edge of Edinburgh. It included a hairdresser, GP, fitness centre, staff canteen and the CEO's own plush offices, replete with expensive art and gold carpets. In 2007 Goodwin made his largest, and most disastrous, purchase yet, leading a consortium to buy the Dutch bank ABN Amro for £49bn. It was then the biggest deal in financial services history, and for a short period made RBS the biggest bank in the world. With £2.2tn in assets, the group was more than double the size of the UK economy. But the seeds of the financial crisis had taken root. By the autumn, Northern Rock was nationalised, having suffered the first run on a British bank for 150 years. And within a year of the ABN Amro deal, RBS started to wobble. Shareholders were asked to pump in £12bn of new capital after bosses unveiled £5.9bn of credit crunch write-downs. Goodwin also put the insurance businesses, which include Churchill and Direct Line, up for sale. In August 2008, RBS reported its first loss in 40 years, and Lehman Brothers' devastating collapse a month later unleashed a wave of market turmoil. By October, RBS was nationalised, Goodwin was ousted, and the former Abbey National executive Stephen Hester was parachuted in to run the bailed-out bank. In 2011 a report from the Financial Services Authority (FSA) partly blamed the RBS failure on 'light touch' regulation that had allowed it to rely on risky, short-term funding and pursue deals that left it with an inadequate financial cushion. The report also cited 'deficiencies in RBS management, governance and culture which made it prone to make poor decisions'. Goodwin was accused of being slow to say sorry and proceeded to dig his heels in over the £16m pension package – worth £700,000 a year – he received despite being sacked. As outrage built over what was seen as a reward for failure, he eventually gave up more than £200,000 of annual retirement pay and issued a 'profound and unqualified apology for all the distress caused'. He was never formally disciplined for the bank's failures and his inflation-linked payouts have since crept back up to nearly £600,000 a year. But Goodwin's reputation was left in tatters, having been stripped of his knighthood in 2012 amid concerns that he had 'had brought the honours system in to disrepute'. Within months of being installed at RBS, Goodwin's successor announced a radical restructuring plan after reporting the biggest loss in British corporate history, at more than £24bn. Hester would end up cutting more than 39,000 jobs and slashing the size of the bank's balance sheet by £1tn. The banker later said it felt like 'defusing a ticking timebomb'. But Hester sparked controversies of his own. First he butted heads with ministers over pay, having begrudgingly agreed to waive his bonus every year except 2010. Hester said he considered resigning in 2012 when he lost out on £1m due to public pressure. Then, in 2013, scandal returned when the bank was fined £390m for rigging the Libor interest rate, with some of the wrongdoing having taken place on Hester's watch. After five years overseeing what he called an RBS 'soap opera', Hester was forced out. Despite sweeping cuts, he had not shrunk the investment bank as deeply as the then coalition government would have liked, and only managed to take the bank out of 12 of the 50 countries in which Goodwin had planted the RBS flag. He was replaced by the New Zealand banker Ross McEwan, with Howard Davies, the former head of the recently axed FSA, installed as chair. Together they were tasked with exiting another 25 countries and slashing the investment bank. In an attempt to head off further pay rows, George Osborne, then chancellor, scrapped executive bonuses at the bank under a directive that lasted until 2022. He expected cultural change to naturally follow. The goal? To get the group on a stable enough footing, centred on a solid, domestic retail bank, that allowed the government to start selling its shares. McEwan, versed in retail banking, drove the domestic strategy, while Davies tells the Guardian he focused 'trying to sort out the sins of the past in order to put the bank in a position where it was saleable'. That included RBS's role in the US sub-prime mortgage crisis, money laundering allegations, and a scandal involving its defunct Global Restructuring Group (GRG), which was accused of pushing small- and medium-sized businesses into failure and stripping them of their assets. The bank eventually reached a $5.5bn settlement with US regulators in 2017 for mis-selling toxic mortgages. In 2019 it effectively emerged unscathed over the GRG scandal, despite the regulator having found 'systemic and widespread' mistreatment of customers. Two years into the McEwan-Davies era, Osborne kicked off the government's privatisation plan, selling the first tranche of state shares. Davies says the bank did its best to stay the course: 'The bank had had such a formative near-death experience that people had become very conscious that we were not [going to risk] getting into new regulatory issues.' That included axing its motor finance business, a move that proved fortuitous given rival banks such as Lloyds are now embroiled in a car loan commissions scandal. 'We probably left some money on the table by not being in that business … but it was a difficult business to be compliant in, so we basically were out of it,' Davies says. There was also the matter of sticking to EU state aid rules, which required RBS to sell a portion of the business to ensure it was not getting too much of a leg-up compared to peers. It carved out but failed to sell 315 branches under a resurrected Williams & Glyn's brand. An alternative deal with EU regulators eventually led to it closing a swathe of branches and funding a £750m scheme to encourage business customers into the arms of challenger banks and fintechs. The move drew a line under the bailout terms, just as RBS reported its first annual profit in 2018. With that came dividends – including to its largest shareholder, the UK government. 'We desperately wanted to be a normal bank, and we were at last able to make decent returns,' Davies says. 'And it was a vindication of pulling back and pulling down a lot of the parts of the bank that were weighing [us] down.' Davies initially thought the bank would return to private hands by 2020, but the US mortgages fine and Covid crisis put those hopes on ice. Shares fell below 100p during the pandemic, making it hard for the government – which had paid around 500p a share during the bailout – to justify selling at such a discount. By that time, McEwan had stepped down, handing the reins to the longtime NatWest staffer Alison Rose in 2019. The first female CEO of a FTSE-listed bank, she became a City darling, championing diversity and driving cultural change at a lender by then synonymous with scandal. Rose wasted no time making sweeping changes, including a switching the toxic RBS name three months into her tenure to NatWest – Goodwin's first acquisition target. She also took advantage of strong finances to launch billion-pound buybacks of government shares, accelerating the privatisation. After a decade of turmoil, Rose was not only palatable but upheld as a City leader. She was being tapped to lead a state inquiry in female-led business that bore her name, co-chaired a UK energy efficiency taskforce, and sat on the prime minister Rishi Sunak's business council. She was even made a dame in the 2023 new year honours list for helping to restore NatWest to stability and profitability. Then came the controversy and the eventual fall from grace. In summer 2023, it emerged that Coutts, NatWest's private bank for the ultra-wealthy, planned to shut Nigel Farage's bank accounts, sparking fury from the now-MP and Reform UK leader. Farage obtained internal documents showing that the bank had concerns over his political views and launched a campaign centred on what he posed as unfair discrimination by the state-owned bank. The scandal escalated further when it emerged that Rose had discussed Farage's case with a BBC journalist. The Tory government capitulated to media pressure, and in a stark departure from the government's hands-off approach, forced Rose to step down, against the wishes of the NatWest board. A private bank, with no state-owned shares, would have been treated differently, Davies says. And Rose might still have the job. 'I think if they hadn't owned the shares, I hope and expect that chancellor would have said 'nothing to do with us'. So, yes, I think it was totally, totally significant.' A subsequent investigation by an external law firm found no evidence backing Farage's accusations that NatWest was debanking customers based on their political views. But Rose had already been replaced by NatWest's business banking boss Paul Thwaite – a man seen as 'calm and unflappable' by a board members keen for some quiet after another tumultuous period in the political crosshairs. By 2024, Davies, too, was replaced, by the former Network Rail and Mastercard chair Rick Haythornthwaite. The pair are now ushering in a new era for the lender, but at a massive cost to the public. The government has only recouped about £35bn of the more than £45bn it spent rescuing the lender, with the bulk of the government's shares having been sold below the 502p at which they were bought. Shares have only recently surged above that price, leaving the taxpayer with a £10.5bn loss. Haythornthwaite said last month the bank was indebted to the public for keeping the lender afloat. And while Thwaite said he is 'absolutely ambitious for the bank' as it returns to private ownership, he insisted bosses are not going to repeat the mistakes of the past. For now, that could mean running a much more 'boring' bank. 'If boring means being thoughtful about risk versus reward, and driving better returns for shareholders, then I'm absolutely comfortable with that.' Inicia sesión para acceder a tu cartera de valores
The National
a day ago
- Business
- The National
Why do Labour want to gamble your pension on the financial markets?
The Chancellor will order pension funds to be consolidated into 'megafunds', which must manage £25 billion in assets by 2030 and have some of this invested in UK firms. The UK Government insists that the interests of savers 'are at the heart of our pension reforms' – but would you bet the house on the British economy if you had it your way? The Government's reasons for reforming the system are straightforward and, most experts will tell you, compelling. Pension funds are huge pots of money which are relatively unproductive. They are invested in safe bets like government bonds, which provide slow and steady returns; perfect for retirement planning. The question the Treasury has dared to ask is this: What if they were really put to work? Instead of coasting along, they could ride the high seas of the private markets. This is, as the Government helpfully pointed out in its press release about the new reforms, a way of generating better pay-outs for pensioners when retirement comes around. It also frees up huge pools of capital to be invested into British businesses, which will hopefully boost the economy and give the Government some breathing room in its self-imposed fiscal straitjacket. But you needn't be Gordon Gekko to work out that high reward is usually accompanied by higher risks. By encouraging pension funds into the opaque and volatile world of private investment, the Government is straightforwardly putting people's life savings at the mercy of the market's vagaries. READ MORE: Experts warn Labour's pension reforms pose 'high risks' for savers Think of the 2008 financial crash. Mortgages were sold to people who couldn't afford them and investors packaged them as profitable financial products for speculation. For a time, it was fantastic. It fuelled economic growth and made homeowners out of Americans who would otherwise have been priced out of the market. But when the boom turned to bust – as it always must – the consequences were more painful as the speculation was not based on abstract capital but the roofs over people's heads. The last Labour government suffered from an overconfidence in the power of financial markets. Remember Gordon Brown (below) hailing the end of boom and bust? (Image: PA) It appears Labour continue to suffer from the same malaise. Add to this other risks. By directing the pensions of British workers to be invested into the British economy, the Government is telling funds to put all their eggs in one basket, breaking the most elementary rule of investing. If the economy tanks, the funds tied up in these companies suffer and pensioners take a double hit. Now they're in a recession and the value of their pension has tanked. Elsewhere, there are whispers that by encouraging pension funds to invest in private markets, pension funds may divest from the bond market in large enough numbers to bring up interest rates. This could lead to businesses struggling to borrow money – the key problem these reforms are intended to address. The question is this: Would you trust Rachel Reeves with your pension? Perhaps ask her for a close look at her CV before answering that.
Daily Mail
2 days ago
- Business
- Daily Mail
NatWest is grateful to taxpayers and it's ready to get the UK growing, says chairman Rick Haythornthwaite
Sir Rick Haythornthwaite is the chair of NatWest. As NatWest, the bank I chair - or RBS as it was then - returns to full private ownership for the first time since the global financial crisis, I can still vividly recall the fear that gripped markets and the country in those fraught weeks of October 2008. At that time, I was Chair of Mastercard in the United States. And although we were not at the epicentre of the storm, our customers and colleagues certainly were. These events took place nearly two decades ago, but remain fresh in my mind. Fear that the ATMs would stop working. That the whole financial system – savings, mortgages, cash - would grind to a halt, with results that could barely be contemplated. It was a time of extraordinary uncertainty that required extraordinary action. The Prime Minister, Gordon Brown, and the Treasury team, led by the then Chancellor Alistair Darling, were under enormous pressure. They took a bold decision to step in and rescue our banking system and, by extension, our economy. While the passage of time makes it easy to underplay this moment of reckoning, we at NatWest remain incredibly grateful to the government, and to UK taxpayers, for their intervention. It stabilised the UK financial system at a time of global crisis. It saved the country's banks and, in turn, protected millions of borrowers, homeowners, savers and businesses. And it provided the capital for UK banks first to survive and later to undertake the fundamental change that was required. In 2008, RBS Group was fleetingly the biggest bank in the world, with £2.2 trillion of assets, larger than the entire GDP of the UK. For over a decade, the bank was in recovery mode. Initially this was 'life support' but, as the bank was stabilised, there was the opportunity to refocus. Today, having rebranded to NatWest Group, we are simpler, safer and focused on our customers. We are consistently profitable, with around 95 per cent of our revenues coming from the UK. And finally - after 17 years - it was yesterday announced that the government is no longer a shareholder in our bank. Although this has no strategic or operational impact, it is a significant symbolic moment, marking a new, forward-looking chapter in our story. Of course, it is not just NatWest Group that has changed since 2008. The balance sheets of banks across the UK have fundamentally transformed, allowing us to continue lending and supporting our customers through a number of real-life stress-tests – from the Covid pandemic, to energy price shocks through to costing of living challenges. These events have shown that our banking system is strong and resilient to the biggest pressures. In part, this is because of the sweeping regulatory changes put in place after the financial crisis. This high-quality regulation is a competitive advantage - valued by global investors - and is something we should protect, even though there are clear opportunities to reduce duplication and complexity. Perhaps the biggest transformation has been in the City's culture. Those in power are rightly held to high standards. And industry leaders, Boards and regulators have focused on embedding values that encourage employees to act in the best interests of both the consumer and wider society. The financial crisis showed us the consequences of when ambition comes before customers. Today NatWest Group is about winning with our customers, rather than winning at all costs. Of course, customers themselves have higher expectations too. The continued pace of technological change, along with increases in competition, have shifted the balance in benefit of the customer. They can choose how and where they bank – at any time of night or day. We are at an inflexion point, not just in our bank's history, but in the context in which we're operating. With the country's banking sector going through almost two decades of recovery, it is fitting that growth is now at the top of the national agenda. With the right foundations and support in place, financial services can help to unlock the investment required to create high-quality jobs, improve our country's infrastructure and boost growth across every region and nation of the UK. NatWest Group is ready to step up to this challenge. And we could not have done it without the support of the taxpayer 17 years ago. We are in a position where we have moved on from the issues of the past, without forgetting the lessons. We have the scale and presence in communities around the country and, crucially, a strong balance sheet which means we can lend to our customers and help drive economic growth. We are here to support the ambitions of people throughout the UK, turning possibilities into progress. Whether that is helping a family to buy a home, supporting an entrepreneur to start their first business or providing a growing firm with the insights and funding to create jobs and access new markets. Ultimately, that is what a bank should do.
