Occupy London Tour Shows Bankers Profiting Amid Poverty
Bank security guards in London lock the doors when they see Liam Taylor coming.
At a time of protests in March 2011, the secondary school teacher and a dozen others pushed through the revolving doors of Barclays Plc (BARC)’s headquarters in the Canary Wharf financial district of London. He led placard-waving chants to protest bonuses and tax avoidance.
The British bank was handing out 65.5 million pounds ($106 million) to eight executives, including Chief Executive Officer Robert Diamond, whom Taylor has never met. Meanwhile, the council of the poverty-mired surrounding London neighborhood of Tower Hamlets was slashing 72 million pounds from its taxpayer-funded budget.
Here, where two worlds collide, the 26-year-old umbrella-toting teacher plays an active role in the Occupy London protest movement. Tower Hamlets has one of the highest rates of young people receiving jobless benefits in London, the highest proportion of poor children and older people in England and the worst child poverty in the U.K.
In its midst is Canary Wharf, a privately owned, guarded riverside oasis of wealth where Taylor leads Occupy tours every couple of weeks. Nine of the world’s biggest banks trade, lend and advise clients here. His message: This is where the wealthy 1 percent enrich themselves by avoiding tax, racking up debt, selling risky investments and using public funds for bailouts. They do so at the expense of the remaining 99 percent, who bear the burden of higher taxes and fewer public services, he says.
World’s Highest Salaries
“These huge glass towers you can see around us are all in Tower Hamlets, and yet Tower Hamlets remains the borough with the highest rate of child poverty,” says the soft-spoken Taylor, who has blue eyes and cropped red hair. “The bonuses are being paid out of money which should have been paid in tax to provide public services.”
Canary Wharf is the base for companies that pay some of the highest salaries in the world. They include Barclays and HSBC Holdings Plc (HSBA) of the U.K., Switzerland’s Credit Suisse Group AG (CSGN) and the European operations of U.S.-based Citigroup (C) Inc., JPMorgan Chase & Co., Morgan Stanley (MS) and Bank of America Corp. (BAC)
Protests over economic inequality erupted around the world again last week. After a year of Occupy and trade union demonstrations in London, the sense of unfairness is growing as support for the U.K. government erodes. The ruling coalition of Conservative and Liberal Democrat parties lost hundreds of seats in last week’s local-council elections, although London’s Conservative Mayor Boris Johnson retained office.
Scale of Inequality
British austerity measures are taking effect just as the U.K. enters its first double-dip recession since the 1970s. The budgets of Tower Hamlets and the deprived boroughs of Hackney and Newham were cut the most among London neighborhoods last year while wealthy Richmond-upon-Thames’s was reduced the least.
Income inequality among working-age people has risen faster in the U.K. than in any other wealthy Western country since 1975, according to the Paris-based Organization for Economic Cooperation & Development. London and the finance industry are the driving forces behind the rise, according to Mark Stewart, an economics professor at the University of Warwick.
“There is a groundswell of increasing concern with the scale of inequality,” says Richard Wilkinson, coauthor with Kate Pickett of the book, “The Spirit Level.” They make the case that more-unequal societies have lower life expectancies and more mental illness, violence, teenage pregnancies and incarceration, resulting in less trust.
‘Out of Stock’
Nowhere is the divide between rich and poor more evident than in Tower Hamlets and Canary Wharf. Many of Canary Wharf’s 95,000 workers travel to and from the skyscrapers on trains that pass under or over the 240,000 residents of Tower Hamlets. Taylor’s students say commuters on trains look right through them. A four-lane highway and railway separate Canary Wharf from the rest of the borough. There are guarded checkpoints for cars.
Canary Wharf’s shiny underground malls are decked with advertisements for products including a Citigroup account for those with an “international lifestyle.” The grubby streets of Tower Hamlets feature empty spaces covered with graffiti: “Sorry! The lifestyle you ordered is currently out of stock.”
Taylor moved to Tower Hamlets in 2008 and soon began teaching history and citizenship as the financial crisis unfolded. He had just graduated from one of the oldest colleges in one of the most elite universities in the world -- Balliol College of Oxford University -- where “The Wealth of Nations” author Adam Smith and the welfare-state pioneer William Beveridge studied.
U.K. Bank Rescue
The son of government-employed social workers, Taylor was born the same year that former Prime Minister Margaret Thatcher’s Big Bang financial deregulation triggered a massive expansion of the U.K. banking industry. That spurred demand for the giant trading-floor spaces of Canary Wharf.
Taylor watched as lenders took multibillion-pound government rescues. Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc (LLOY) got bailouts in October 2008. The British government propped up banks with 1 trillion pounds in capital and guarantees. While Barclays didn’t cede an equity stake to the U.K., the bank did benefit from government liquidity support along with all lenders, former CEO John Varley said in 2010.
The gross domestic product of the U.K. is still more than 4 percent below its peak in early 2008, while net debt has almost doubled to 1.02 trillion pounds since then. In May 2010, the Conservative Prime Minister David Cameron took office with a mandate to halt the government’s debt spiral.
Sense of Injustice
Cameron pushed through cuts to spending on public services including hospitals and schools such as Taylor’s, where about 60 percent of students are poor enough to get free meals. Taylor’s sense of injustice boiled into anger, and he evolved into a political campaigner convinced that the finance industry creates inequality rather than wealth.
“My entire life I’ve been told that banks are a good thing, that they bring lots of money into the economy and that we shouldn’t do anything about them,” Taylor says. “It’s time for a bit of hearing the other side of the argument.”
Tower Hamlets takes its name from the villages that surrounded the Tower of London, the famous 946-year-old fortress. It was the site of gatherings during the Peasant’s Revolt of 1381. The modern borough is crammed with shops, cafes and street markets selling vegetables and garments such as brightly-patterned kaftans. More than 20 percent of the population is of Bangladeshi origin.
Canary Wharf bankers looking northeast can see the concrete blocks of the Robin Hood Gardens estate, where Bangladeshi women grow spinach in flowerbeds and where laundry dries on balconies. Terraced houses and government-owned flats are packed in among historic buildings that survived bombs in the Battle of Britain.
Canary Wharf Jobs
The borough stretches north to the stadium built for this summer’s Olympic Games and west to the City of London, the ancient financial district built around St. Paul’s Cathedral and the Bank of England. While the Olympics are managed from Canary Wharf by former Goldman Sachs Group Inc. executive Paul Deighton, none of the events will take place in Tower Hamlets.
Until the 1980s, Canary Wharf was the largely derelict site of disused River Thames dockyards. Construction of one of the world’s biggest financial centers was a pioneering “regeneration project,” according to Howard Dawber, strategic adviser to Canary Wharf Group Plc, the company that manages and develops the district. Companies there employ about 9,000 people from Tower Hamlets, and Canary Wharf has generated 720 million pounds of contracts for local businesses, he says.
People from the two worlds don’t know much about each other. When a reporter asked 50 people in Canary Wharf on Feb. 20 which borough they were in, 37 said they didn’t know.
“It’s a bit strange that this is all part of Tower Hamlets, because it’s not poor,” said Eloise Hillman, an information technology consultant, as she walked among the skyscrapers of Canary Wharf, where she works. “It’s not run-down, and it’s banking and financial and rich.”
From the other side of the tracks in Tower Hamlets, Barbara Williams can see the tower-top signs of capitalist icons such as Citigroup from her balcony. Walking through the streams of suited workers makes her feel “worthless,” she says.
“They think they’re above me, that I’m not worthy to share the same air as them,” says Williams, 33, an unmarried mother of two. She has lived on government welfare since bearing her first child at the age of 17.
With no savings and 13,000 pounds of debt, Williams estimates she will have to earn 24,000 pounds a year to maintain her standard of living without government benefits. In April, she found a job at a company that provides holidays for the disabled. It pays 16,000 pounds a year.
“We didn’t cause the crisis,” Williams says. “The government and the people with the high-paid jobs caused it.”
Royal Navy Veteran
The aim of the welfare overhaul is to “recreate a culture of independence and self-reliance,” said David Freud, the government minister for welfare reform who is a great-grandson of Sigmund Freud and a former UBS AG (UBSN) investment banker, in a speech in April. The system has trapped people in joblessness and benefit dependency, he said.
That isn’t the way John Jones sees the benefit changes. Wounded twice serving in the Royal Navy during World War II, he worked 50 years as a plumber and paid taxes to fund the British welfare state. Now blind, with prostate cancer and arthritis of the hands, the 91-year-old says he feels let down.
A representative of Tower Hamlets visited to tell him the borough council would discontinue his midday caregiver’s visit, Jones says. That means no warm food or drink until evening.
“She said it’s all to do with the money,” says Jones, who keeps the ashes of his wife in an urn by a sofa. “I was very upset about it.”
The cutbacks may bring wrenching change to the borough, says Tower Hamlets Mayor Lutfur Rahman. A new cap on housing benefits may force 6,000 people to move, he estimates. While the mayor declines to discuss Jones’s case, he says he wants to protect the most vulnerable.
At Langdon Park School where Taylor teaches, the spending cuts became evident soon after Cameron gained power in May 2010. Teacher pay was frozen. A multischool program to increase participation in sports -- dubbed by politicians as part of the Olympic Games legacy -- was cut in 2010. Headmaster Chris Dunne, who coordinates the project for a group of schools, mobilized students to join in a protest at Parliament.
“With the end of this program, there will be no Olympic legacy,” Dunne says. While he is negotiating to share the cost of continuing it with other schools, his own school’s budget faces a 330,406-pound deficit because it is currently carrying the expense of the program. The 62-year-old educator has led the institution for 20 years.
Public Speaking Champion
Taylor’s classroom is in a temporary block looking south across a running track toward Canary Wharf. The sun glints off the square glass towers, which peek over concrete housing units. The classroom walls are decorated with displays on the industrial revolution and world religions. The school has about 890 students ages 11 to 16 and specializes in sports such as soccer, cricket, tennis, basketball and volleyball.
Headmaster Dunne says he can’t recall a student ever getting work experience in Canary Wharf.
John Parry, a fair-haired 15-year-old student at Langdon Park, won the Tower Hamlets public speaking competition this year, sponsored by Lloyd’s of London, the world’s oldest insurance market. He says he would be glad for an opportunity to work at Canary Wharf, and yet he sees his prospects for going to university dimming since the government almost tripled fees to as much as 9,000 pounds a year. Parry sees Canary Wharf as a place for people from another class.
Bonuses Versus Benefits
“You can do anything if you want to do it, but I think it would be harder for someone like me to get there,” says Parry, who wears a black sweater and the school’s black-and-yellow tie. He can see Canary Wharf from his bedroom window. The son of a scaffolding builder who worked on the Olympics site, he says he is thinking of becoming a plumber and a property developer.
The drumbeat of service cutbacks amid bank bonus payouts helped make 2011 a year of protest rolling across the U.K. Days after Taylor led his band into Barclays that March, 250,000 public-sector workers marched through London objecting to cuts to education and health care. The government was carrying out the biggest fiscal consolidation since the Second World War. Banners said: “Cut bonuses, not benefits.”
Last August, social tension across London flared up in the worst riots since the 1980s. Thousands of young people looted shops after a peaceful protest over a police shooting in the north of the city turned violent. Police arrested thousands after shops, buses and cars were burned.
Occupy London Encampment
In October, Taylor joined Occupy London in pitching tents outside St. Paul’s Cathedral. During the four-month encampment, participants created a university in a tent and held twice-daily discussions on the cathedral steps about war, corporate corruption, poverty and pollution. They fed homeless people, attracted support from artists and politicians including the American civil rights figure Jesse Jackson, and criticism from some bankers who told them to get jobs. Taylor showered at home on the way to work at the school.
One Sunday evening in November, protesters were preparing to debate the role of the City of London Corporation, which manages the old financial district around the cathedral. The corporation traces its roots back more than 1,000 years, and officials have long defended and promoted the finance industry.
City of London Debate
Stuart Fraser, as the corporation’s policy chairman, personifies the industry that Occupy participants criticize. He has worked in the City for a half-century after starting as a stockbrokers’ messenger. The 66-year-old learned of the planned debate from Twitter, he says, and walked over to participate.
“I just went along and said if you are going to talk about it, you might as well have the arch-evil person here,” Fraser says. He found three speakers discussing whether the corporation should be dissolved, with no one to challenge them, he says.
Over succeeding months, Fraser continued to defend the industry against complaints it didn’t pay enough tax while adding to economic inequality. One sunny day in March, Fraser strode into an interview in the 600-year-old Guildhall in the City and extolled the benefits of the finance industry, including 63 billion pounds of taxes paid in 2011.
At the same time, protesters are having an impact, Fraser says. He credits the movement with elevating inequality on the national agenda. On March 8, the City agreed to join Occupy protestors in backing a campaign by the Tower Hamlets-based organization Citizens U.K. to pay higher wages to cleaners and other workers.
‘Failure of Ambition’
Some people on both sides of the railway tracks are trying to break down the barriers that contribute to inequality. Rushanara Ali, a Labour member of Parliament from Tower Hamlets, helped start Fastlaners, a two-week finishing school to prepare university graduates for jobs in Canary Wharf and elsewhere. It provided training in teamwork, office etiquette, posture, voice and dress. She and a Tower Hamlets nonprofit, the Young Foundation, got government funding and office space from Canary Wharf Group.
Local people need that kind of help to overcome the psychological obstacles to economic opportunities, says Ali, 37. Born in Bangladesh and raised in Tower Hamlets, she was educated at Oxford University’s St. John’s College.
“There has been an absolute failure of ambition in terms of getting the business community to work closely with the local community,” says Ali, who wears her dark hair long and favors trouser suits.
Fastlaners’ funding ran out in 2011 and wasn’t renewed by the new government. Though an opposition MP, Ali is still working to close the opportunity gap. She and the Young Foundation are promoting another program called UpRising, designed to pair up young people with mentors from companies in Canary Wharf and elsewhere.
Vikash Gupta was one of the mentors at a twilight reception Ali attended one evening in February. He is a Barclays banker for clients with more than 10 million pounds to invest. Gupta, 35 and born in India, works above the foyer that the teacher Taylor invaded a year ago.
“The biggest inequality we can address is the level of confidence and ambition and accessibility,” says Gupta. The son of a soap maker from Jharkhand and a mother who was married at the age of 13, Gupta was the first in his family to go to university, studying mechanical engineering at Bangalore University.
59 Pound Haircut
He is mentor to Andrew Jude Rajanathan, a 24-year-old graduate of Queen Mary, University of London in Tower Hamlets and of the London School of Economics. Rajanathan inherited his family house at the age of 20 when his Sri Lanka-born father died. While at university, he worked to pay the mortgage and support his mother.
Rajanathan works at Liv-ex, an online market for fine wine, and says equality campaigners have “very valid” concerns, which the government can address with more support for entrepreneurs and work for those leaving school.
Gupta himself sees the divide between Tower Hamlets and Canary Wharf as he walks from his riverside apartment with manicured lawns. He crosses under the railway to reach the New Look barbershop in Tower Hamlets not far from Taylor’s school. A good haircut there costs 7 pounds, compared with 59 pounds for the cheapest cut at the Toni & Guy salon in Canary Wharf.
When Gupta suggested distributing leaflets in Canary Wharf, barber Ali Hussain’s response surprised him, Gupta says. Hussain said he had never been to the business district, where he thought entry required a security pass, Gupta says.
Taylor’s Occupy Tour
Taylor, who makes 29,000 pounds a year, started his free Occupy tours of Canary Wharf last November. The visits began as a way of educating the public after Canary Wharf Group obtained an injunction against protestors, Taylor says.
On a chilly January evening, Taylor waits at the top of the shiny metallic escalator leading from the Canary Wharf subway station. A guard jokes that Taylor should demand higher pay for security people. The tour lasts a little more than an hour and draws between four and 25 people each time, plus trailing guards. The teacher insists he is motivated by justice and not by the politics of envy. Taylor begins by quoting C.S. Lewis.
“The greatest evil is not now done in those sordid dens of crime that Dickens loved to paint,” he says, reading from notes. “It is conceived and ordered in clean, carpeted, warmed and well-lighted offices by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voices.”
“Arguably, the kind of offices that we see around us here right now,” Taylor says.
‘Doomed, Cursed Building’
A century ago, the area was full of ships delivering goods from all over the world, Taylor says. The American author Jack London called it “one unending slum.” Today, “the only things traded are the figments of bankers’ imaginations,” Taylor tells the tour group.
The first stop is a tower occupied by JPMorgan. (JPM)
“This is the most doomed, cursed building in financial history,” Taylor says. It was originally intended for Enron Corp., the world’s largest energy trading company before its 2001 bankruptcy filing because of accounting fraud, he says. Then Lehman Brothers moved in. The securities firm filed the biggest bankruptcy in U.S. history in September 2008 because of too much debt and risky real estate investments.
Taylor shepherds his group on to Barclays, taking questions from university students.
“Barclays bank is systematically avoiding tax,” the teacher tells his tour.
Barclays Tax Payments
While bankers were grilled on the matter last year in Parliament, Barclays maintains it obeys tax law. In response to questions last year from lawmakers, the bank disclosed that in 2009 it paid 113 million pounds of U.K. corporation tax. That worked out to 4.5 percent of the bank’s U.K. pretax profit of 2.5 billion pounds. The statutory rate then was 28 percent. Barclays said losses on writedowns reduced the amount owed.
“Barclays is not evading taxes,”Diamond, the Barclays CEO, told a Treasury Committee hearing at the House of Commons. “We are complying with both the spirit and the letter of the law.” Last year, the 60-year-old American executive called for bankers to be better citizens.
The company’s 2011 citizenship report shows that almost 46,000 employees did 418,000 hours of volunteer work. The bank reported paying 1.7 billion pounds of corporate tax globally last year, and 300 million pounds in the U.K.
Teachers’ Pension Protest
On a warm March day, Taylor joins thousands of fellow London teachers in a march on Parliament. The government is raising teachers’ retirement age to 68 from 65 and requiring higher contributions without increases to salaries. As they pass through Trafalgar Square, the teachers chant, whistle and wave colorful banners and placards.
“What do we want? Fair Pensions!” the teachers shout. “When do we want them? Before we die!”
Taylor carries a black backpack with a water bottle and a Mars bar in the side pocket. He holds up a banner bearing the name of his school. Marching, protesting, occupying and guiding tours are the tools Taylor says he has to help rebalance the world.
“If you’ve got money and you’ve got connections, you’re heard,” Taylor says. “And if you don’t have money and don’t have connections, you’re invisible.”
To contact the reporter on this story: Simon Clark in London at firstname.lastname@example.org
To contact the editor responsible for this story: Melissa Pozsgay at email@example.com