King: The Bank of England needs the trade unions
By Ian Dunt and Samantha Cullen
Trade unions and the Bank of England must work together to create a more sustainable British economy, Mervyn King has told the TUC.
But speaking to politics.co.uk later, RMT general secretary Bob Crow, who boycotted the speech, said it was “downright patronising”.
Mr King, the second Bank of England governor to address the TUC conference in its history, began his speech by conceeding that the financial sector was solely to blame for the events leading up to the recession.
“There was nothing fair about the financial crisis,” he told the audience.
Mervyn King Speech as-it-happened
“It was caused not by problems in the real economy. But it was the real economy that suffered and the banks that were bailed out.
“Your members … are entitled to be angry. But however legitimate, anger will not produce change unless… it is harnessed to cool analysis of what happened and why.”
Mr King received polite applause for his speech, which was an improvement on what many commentators had expected from the audience of trade union members and activists.
But there was strong support in the hall when he admitted agreeing with union activists about the size of bankers’ bonuses during the ensuing Q&A session.
“I think that my experience will be that most people in this country don’t object to people earning more than they do, even a lot more, provided they understand why and can see the contribution people have made,” he said.
“But when large bonuses are paid to people in large organisations that only two years earlier were bailed out by the tax payer comes somewhat harder to understand.”
Mr Crow walked out in protest with his RMT union delegation when Mr King stood up to speak, but he told politics.co.uk the coonference should have invited those suffering from cutbacks to speak rather than a banker.
“It is not a question of whether we have a right to be angry – that is just downright patronising,” he said.
“What we are angry about is people like him and his ilk bleeding this country dry of billions pounds and then expecting ordinary working class people to pick up the tab.
“The Mervyn King speech this morning was a bit of the low really for the TUC. To have somebody who is actually one of the architects of the financial crisis speaking to the trade unions whose members are actually going to be the real victims from these cuts and this economic meltdown is just the wrong way of doing things.”
Mr King said that something had to be done to tackle the consequences of excesses of capital flowing from poor to rich countries and the financial sector’s disposition to take extraordinary risks given the amount of capital on offer.
He also warned that action was needed so that banks were no longer “too big to fail” and were subject to market discipline.
He hoped the trade union movement “will continue to engage in [the] process” of international cooperation to reduce the flow of capital from poor to rich countries.
Attempting to sell a message of unity, Mr King said: “The Bank of England is there to serve the whole economy right across the length and breadth of this country.”
He welcomed TUC general secretary Brendan Barber’s role on the Bank of England’s board, saying he brought a “distinct and important” perspective to its business.
But Mr King did not sidestep the issue of the deficit, telling delegates that a “clear and credible plan” was needed to reduce it and that he would be “shirking his responsibilities” if he didn’t explain the consequences of a failure to cut public spending.
“It will be some time before our banking system will be able to finance the recovery on the usual terms,” he concluded.
But many union leaders remained unimpressed.
Paul Kenny, GMB general secretary said: “His analysis of the excesses of the banking system reminds me of Jessie James warning people in the Wild West about the dangers of train robberies.
“The truth is that he presided over the Bank of England and he never spoke out when he should have done. He failed us.”
The TUC conference, seen as the curtain raiser to the party political conference season, is taking place in Manchester, where Labour will unveil its new leader in two week’s time.
