What sticks in the craw about Sir Fred Goodwin’s knighthood is the fact the honour was conferred specifically for “services to banking”. Sir Fred’s stewardship of Royal Bank of Scotland has palpably done a great disservice to the sector’s reputation – hence the continued clamour, heard again in parliamentary hearings this week, for him to be stripped of the title. But he was not alone and his hubris and errors of judgment do not put him in the same category as dishonoured spies and traitors such as Anthony Blunt or Roger Casement (who lost his life, not just his gong).
Whether to dock Sir Fred’s knighthood would be decided by a medieval-sounding “forfeiture committee”. Working on a case-by-case basis, it can recommend removal of awards to “preserve the integrity of the honours system”. As it happens, three of the four civil servants on the committee have knighthoods themselves. If they do consider Sir Fred’s case, that could make them either more sensitive to threats to the system’s integrity, or more resistant to enforcing a forfeit – a bit like a weak-willed remuneration committee of former corporate titans asked to consider cutting the chief executive’s bonus.
Sir John Parker, who chairs one of the committees that decides who should get honours, understated the popular sense of outrage when he told MPs that “if a Fred Goodwin came to us today . . . it would be very unlikely we would award a knighthood”. But stripping Sir Fred of his title, while it would satisfy a natural desire for punishment, would do nothing to restore the battered integrity of the honours system. A generation of bankers is now condemned to life as plain Mr or Ms. So be it. Plain banking is what people now require. But even if that were not the case, Sir Fred’s flogging in the court of public opinion should have taught bank chiefs they have nothing to gain and all to lose by accepting the boomtime baubles their knight-banker predecessors were offered.
Out of house and home
Accept the optimism of the chancellor’s Budget forecasts for the UK economy over the coming years, if you like. Set aside Friday’s worse-than-expected news on the decline in first-quarter GDP. Still it is hard to see how we shall all have somewhere to live, even if all the promises come true.
The gap between the government target of 240,000 new homes built every year by 2016 and the reality – a projected 70,000 homes in 2009, or fewer – is growing. The Budget measures aimed at kick-starting housing developments look feeble.
Some housebuilders say they are experiencing better sales rates; prices may have stabilised (depending on the index you favour); measures privately derided as insufficient to prevent apocalypse last September are starting to have a small positive impact. Crucially, mortgage availability has improved since the near-freeze of last autumn.
The imbalance between supply of homes and demand from buyers is an article of faith that housing market bulls were still touting well after prices had peaked. But with the main constraints in the south-east of the country and apartments lying empty in areas of higher unemployment elsewhere, this imbalance is only positive for builders with specific regional strengths, and then only in the longer term.
Perform a simple calculation: a gap of some 180,000 homes can be filled in one of two ways – by building it all as social housing, at a rough cost of £100,000 a unit, or by finding enough properly financed private buyers, with medium-term prospects of keeping their jobs. Yet the government has no money and the one chilly macro-economic truth to stand out in the Budget was that even when recovery is under way, “it will take time for unemployment to start falling”. So, yes, there are signs the housing market has come out of its freefall. But if the parachute doesn’t open properly, there is no difference between skydiving and plummeting.
Court between two stools
Last week’s appointment of Sir David Lees as chair of the Court of the Bank of England does not end the search for supervisors of our macro-supervisors. We have followed (and, by proposing dead and fictional candidates, assisted) the Treasury’s hunt for non-banker paragons to oversee the Bank. Sir David, now at Tate & Lyle, is a good choice, given the constraints. But the government still has to name a deputy and a team of non-executives. The original job ad looked for those with experience at “major financial services companies” – a phrase dropped from the re-advertised vacancy for a chair. Whether or not financiers are appointed will be an early signal of how far the chancellor will go to meet his Budget pledge to “harness the strengths of the financial services sector”.
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