Since November 2008, United Kingdom Financial Investments (UKFI) has been the holding company responsible for managing the government stakes in banks acquired as a result of the financial crisis ‘bailout’. Created by the Treasury, UKFI’s first chief executive was John Kingman, probably the most successful career civil servant of his generation, having become second permanent secretary in the Treasury before the age of 40.
UKFI initially occupied offices in the Treasury buildings, and its operational budget was negotiated with the Treasury. Yet from the very beginning, Kingman’s message as chief executive was that it operated at ‘arm’s length’ from the government. That was the theme of an op-ed piece in the Financial Times placed by Kingman and UKFI’s first chairman early in its life, and again in Kingman’s own account to the House of Commons Treasury select committee of the relationship between government and UKFI.
Note that what were being kept at arm’s length here were public institutions in Whitehall. UKFI was anything but at arm’s length from the City. The first two chairmen were both retired City grandees who had subsequently made reputations as City-friendly non-executives of major public companies.
The first, before he departed to chair RBS, was Sir Philip Hampton, an ex-finance director of Lloyds Bank turned non-executive chair of Sainsbury’s. He was succeeded by Glen Moreno, an investment banker who became chief executive of Fidelity International and then retired to become non-executive chair of Pearson. Moreno’s seat is now occupied by Sir David Cooksey, founder of one of the leading private equity houses in Europe.
The senior full time staff is drawn from a similar pool. John Kingman announced his departure to Rothschild in the summer of 2009, to make some serious money. Robin Budenberg, his successor, spent most of his career with UBS, the Swiss investment bank.
The board consists mainly of banking insiders. With the exception of the Treasury representative, its members have spent several lifetimes in blue chip banks and fund management corporations on both sides of the Atlantic, with CVs including Citigroup, Merrill Lynch, Barclays and Warburg.
It is hardly surprising, given this history, that UKFI’s definition of its responsibilities expresses the values of the financial markets. Public ownership is viewed as a brief transition; the Treasury is a kind of ‘fund manager’ to maximise shareholder value.
The framework document of March 2009, which set out UKFI’s rules of engagement, was crystal clear: ‘The company should … develop and execute an investment strategy for disposing of the investments in an orderly and active way through sale, redemption, buy-back or other means within the context of an overarching objective of protecting and creating value for the taxpayer as shareholder.’
UKFI has lived up to its mandate. It has consistently taken a permissive line on bankers’ bonuses, arguing that they are a necessary ‘incentive’. It took the occasion of Kingman’s departure to announce a further symbolic separation from the public sector, moving from the Treasury to the offices of the old owners of the Titanic. And it has now recommended to the chancellor that the time is ripe to sell off the rescued Northern Rock.
Why was the opportunity to exercise public control over the banking industry lost? With the exception of the Labour backbencher, Chi Onwurah, parliament has been virtually silent on the unaccountable status of UKFI. But this is hardly surprising. UKFI is a New Labour creation. In the 2008 crisis, the Treasury had no plan B. Faced with the job of managing the new holdings it could only turn for help to its friends in the City so assiduously cultivated during the Brown chancellorship. It is hard for the present opposition front bench to criticise what it brought to life.
But UKFI is part of a bigger story still. The City has changed. It no longer wields influence through amateurish old boy networks or clubland lunches. It is a highly skilled lobbying operation, which, even in the depths of a disaster such as the financial crisis, was capable of fashioning powerful instruments of defence against democratic government – like UKFI. n
Michael Moran and Karel Williams are members of the Centre for Research on Socio-Cultural Change (CRESC) at the University of Manchester. The latest CRESC report on the power of the City in the UK can be downloaded free from
Yasmin Gunaratnam reflects on John Berger’s gut solidarity with the stranger
Charlie Clarke and Heather Mendick discuss how to work through the tensions within Momentum
As man-made global warming gets closer to the tipping point, Andrew Simms finds reasons to be positive about averting catastrophic climate change
In this extract from his new book The Candidate, Alex Nunns tells the inside story of how Jeremy Corbyn scraped onto the Labour leadership ballot in 2015
Graham Jones proposes a framework for a diverse movement to flourish
Musician Eliane Correa reflects on the fading revolution
Trump's victory is another sign of the failure of the centre-left's narrative on climate change. A new message is needed, and new politicians to deliver it, writes Alex Randall
Siobhán McGuirk says the question we are too afraid to ask is simple - what kind of society leads to Donald Trump as President?
The battle lines are clear. Democracy is in peril and the left must take itself seriously electorally and politically. Ruth Potts speaks to Gary Younge, who was based in Muncie, Indiana, for the US election, about the implications of Donald Trump’s victory
We need a society built on openness, community and equality to truly defeat everything that trump stands for, writes Nick Dearden.
Utopia: Work less play more
A shorter working week would benefit everyone, writes Madeleine Ellis-Petersen
Short story: Syrenka
A short story by Kirsten Irving
Utopia: Industrial Workers Taking the Wheel
Hilary Wainwright reflects on an attempt by British workers to produce a democratically determined alternative plan for their industry – and its lessons for today
Mum’s Colombian mine protest comes to London
Anne Harris reports on one woman’s fight against a multinational coal giant
Bike courier Maggie Dewhurst takes on the gig economy… and wins
We spoke to Mags about why she’s ‘biting the hand that feeds her’
Utopia: Daring to dream
Imagining a better world is the first step towards creating one. Ruth Potts introduces our special utopian issue
Utopia: Room for all
Nadhira Halim and Andy Edwards report on the range of creative responses to the housing crisis that are providing secure, affordable housing across the UK
A better Brexit
The left should not tail-end the establishment Bremoaners, argues Michael Calderbank
News from movements around the world
Compiled by James O’Nions
Podemos: In the Name of the People
'The emergence as a potential party of government is testament both to the richness of Spanish radical culture and the inventiveness of activists such as Errejón' - Jacob Mukherjee reviews Errejón and Mouffe's latest release
Survival Shake! – creative ways to resist the system
Social justice campaigner Sakina Sheikh describes a project to embolden young people through the arts
‘We don’t want to be an afterthought’: inside Momentum Kids
If Momentum is going to meet the challenge of being fully inclusive, a space must be provided for parents, mothers, carers, grandparents and children, write Jessie Hoskin and Natasha Josette
The Kurdish revolution – a report from Rojava
Peter Loo is supporting revolutionary social change in Northern Syria.
How to make your own media
Lorna Stephenson and Adam Cantwell-Corn on running a local media co-op
Book Review: The EU: an Obituary
Tim Holmes takes a look at John Gillingham's polemical history of the EU
Book Review: The End of Jewish Modernity
Author Daniel Lazar reviews Enzo Traverso's The End of Jewish Modernity
Lesbians and Gays Support the Migrants
Ida-Sofie Picard introduces Lesbians and Gays Support the Migrants – as told to Jenny Nelson
Book review: Angry White People: Coming Face to Face With the British Far-Right
Hilary Aked gets close up with the British far right in Hsiao-Hung Pai's latest release
University should not be a debt factory
Sheldon Ridley spoke to students taking part in their first national demonstration.
Book Review: The Day the Music Died – a Memoir
Sheila Rowbotham reviews the memoirs of BBC director and producer, Tony Garnett.
Power Games: A Political History
Malcolm Maclean reviews Jules Boykoff's Power Games: A Political History
Book Review: Sex, Needs and Queer Culture: from liberation to the post-gay
Aiming to re-evaluate the radicalism and efficacy of queer counterculture and rebellion - April Park takes us through David Alderson's new work.
A book review every day until Christmas at Red Pepper
Red Pepper will be publishing a new book review each day until Christmas
Book Review: Corbyn: The Strange Rebirth of Radical Politics
'In spite of the odds Corbyn is still standing' - Alex Doherty reviews Seymour's analysis of the rise of Corbyn
From #BlackLivesMatter to Black Liberation
'A small manifesto for black liberation through socialist revolution' - Graham Campbell reviews Keeanga-Yamahtta Taylor's 'From #BlackLivesMatter to Black Liberation'
The Fashion Revolution: Turn to the left
Bryony Moore profiles Stitched Up, a non-profit group reimagining the future of fashion
The abolition of Art History A-Level will exacerbate social inequality
This is a massive blow to the rights of ordinary kids to have the same opportunities as their more privileged peers. Danielle Child reports.
Mass civil disobedience in Sudan
A three-day general strike has brought Sudan to a stand still as people mobilise against the government and inequality. Jenny Nelson writes.
Mustang film review: Three fingers to Erdogan
Laura Nicholson reviews Mustang, Deniz Gamze Erguven’s unashamedly feminist film critique of Turkey’s creeping conservatism
What if the workers were in control?
Hilary Wainwright reflects on an attempt by British workers to produce a democratically determined alternative plan for their industry