What do banks and financiers get in return for paying George Osborne £50,000 for one hour of work? Use your imagination
George Osborne presided over a national productivity disaster when he was Chancellor. But the MP for Tatton is certainly making an outstanding personal contribution to repairing some of the damage now.
Last week the House of Commons’ Register of Members’ Financial Interests disclosed Osborne’s earnings from outside Parliament since he was sacked from the Cabinet last year. What the record shows is nothing less than a productivity miracle.
On 27 October Osborne spent two hours delivering a speech to an outfit called Palmex Derivatives in the City of London for which he received £80,240. That’s more than £40,000 per hour of his time. Not even Paul Pogba of Manchester United gets that kind of hourly rate.
Earlier in the same month Osborne gave a speech to the Securities Industry and Financial Markets Association in New York for just one and a half hours. He expects to receive £69,992 for his efforts; an hourly rate of £46,000.
Osborne’s full salary when he was a Chancellor was around £120,000 a year. Assuming that he worked 10 hour days and took five weeks holiday a year his pay rate was around £50 an hour. So since leaving office Osborne has multiplied his personal output per hour by more than 900 times. If only some the rest of the economy could bottle some of that productivity-enhancing magic. Maybe we should all get sacked from the Cabinet by Theresa May.
But speeches to financial firms are not Osborne’s bread and butter. That will come from four days a month “advising” the colossal US asset manager Blackrock, a job for which he will be paid around £650,000 a year (not including share-based bonuses). Assuming, again, a 10 hour working day that’s £1,350 an hour, still at least 25 times his previous daily rate as a minister.
When he was shadow Chancellor George Osborne talked tough on the need to reform finance, sensing the mood of outrage in the country in the wake of the collapse of Lehman Brothers and the associated economic carnage. In 2009 he made radical noises about breaking up “too big to fail” banks including Lloyds and the Royal Bank of Scotland, which had been bailed out by the taxpayer at huge public expense.
But that radicalism melted away when he entered 11 Downing Street. He did commission the independent Vickers Commission to look into the case for breaking up the giant banks. But Vickers failed to recommend a split and instead delivered a halfway house known as “ring-fencing”. The banks still gripe about the hassle of that reform, but this a pedicure compared to the amputation a full split would have represented.
I’ve heard more than one member of the Vickers Commission relate, in private, that they were led to believe the Chancellor was not interested in a full break-up and were given subtle hints to moderate their proposals accordingly if they didn’t want their report to gather dust on a Whitehall shelf.
And, as the years went, by Osborne talked less and less about financial reform and more about the need to unclip the wings of the banks. Avoiding “the stability of the graveyard” became his catchphrase.
The Treasury’s door was constantly open to the industry’s lobbyists and top executives. In one remarkable episode, he personally intervened to stop the US Department of Justice bringing criminal charges against HSBC for laundering the profits of terrorists and drug dealers. As it happens one of Osborne’s lucrative speeches in January was to HSBC: £51,328 for one hour of work.
As Chancellor he pushed through regulatory changes with major implications for the savings and pension industry – most of them positive for the bottom lines of those companies. And now Osborne works for the largest asset manager in the world, which plans to pay him almost ten times his MP’s salary while he continues to sit in the House of Commons.
Let us, for argument’s sake, imagine that Osborne never once considered, while he was in high office, the possibility of one day earning hundreds of thousands of pounds a year from the financial sector. Let’s imagine that every decision he took as Chancellor in relation to the industry was made with nothing whatsoever except the good of the British public uppermost in his mind.
Even if we are prepared to accept all that, what message does the example of him now being sprayed with cash by giant banks, financial trading companies, asset managers and hedge funds now, all within months after leaving office, send? What’s the message that goes out to other politicians ascending the greasy pole?
It sends the message that it would be wise to be attentive towards the interests of the financial industry because, if your political career is terminated prematurely, these companies can – and do – reward their old friends in ways that would make a Premier League footballer blush.