Community Activists Network
Are banks really the powerhouse of the UK economy? Or could they be some of the most heavily-subsidised businesses in the world?
This chart shows how much banks pay in taxes, and how much they receive in hidden subsidies. Shockingly, it seems that banks receive far more in subsidies than they ever pay in taxes. Note that because of the data available,"Taxes Paid" includes those from insurance companies too, whereas the subsidies only go to the banks. So in fact, the banks' contribution to the UK is even less than it appears in this chart.
The government guarantees the money in your bank account: it says that if your bank goes bust and loses your money, the government will give you your money back. This is supposed to make banking safer, but the reality is that it just encourages banks to take big risks with your money. They can do this because the government will pick up the tab if anything goes wrong.
If we (customers of banks) actually knew how much risk was being taken with our savings, the banks would have to pay us much higher rates of interest to compensate us for that risk. But because the government makes these savings ‘risk-free’ (by passing the risk onto taxpayers), then banks can pay lower interest rates to savers. This saves the banks up to £100 billion a year, according to estimates from the Bank of England (See the Bank of England Quarterly Bulletin Q4 2010 Andrew Haldane’s 2010 paper, also page 18 of this presentation here and the video here [at 18:07] ).
Given that the banks are announcing profits of around £20bn this year, if they didn’t have this taxpayer-funded guarantee then the banks wouldn’t be making any profits, and certainly wouldn’t be paying bonuses.
So it appears that the typical £7billion in annual bonuses are thanks to our support for the banking sector as taxpayers.
Through a complicated accounting process, we have given the banks the power to create new money whenever they issue a new loan. Somebody somewhere has to have responsibility for creating new money, but by giving banks the power to create all of our money we ensure that;
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