RBS crashes as banks get set for rate rises


LOSSES AT the state owned Royal Bank of Scotland (RBS) were twice as bad as expected, at £1.13bn and much bigger than the £950 million in bonuses that it had paid out to its investment banking arm, Global Banking and Markets (GBM).

The state supported bank remained in crisis despite the vast sums of taxpayers’ money that has been poured into it.

However, the same taxpayers saw British Gas making a fortune out of their super-exploitation, as they got mugged yet again.

British Gas, in fact, yesterday refused to rule out more price rises despite posting record profits for 2010.

The UK’s biggest gas supplier made £742 million last year, when it increased household energy bills by seven per cent.

About eight million British Gas customers saw prices rise in December, lifting the average dual-fuel bill increase from £1,157 to £1,239 a year.

Centrica, the owner of British Gas, saw its own profits rise by 29 per cent to £2.3 billion.

Chief executive Sam Laidlaw’s message was to look on the bright side.

This was that he had put off raising prices for ‘as long as possible’ last year but was forced to relent in the face of soaring wholesale prices and the cost of investing in green energy initiatives.

He however refused to rule out further price rises this year, saying events in the Middle East and North Africa highlighted the volatility of the market.

‘About half the bills are made up of the cost of the commodity we buy – whether that’s gas or power – and they are rising. The rest is transport and distribution and the cost of meeting our carbon targets as a country. They are clearly also going up.’

Laidlaw shed crocodile tears when he added: ‘We absolutely understand the difficulty lots of people are having with bills. But these are profits for a purpose.’

Scott Byrom, energy manager at comparison site Moneysupermarket, commented: ‘While many customers were struggling to heat their homes and afford their bills it looks as though British Gas was reaping the benefits.’

Oil prices in London yesterday were up by almost $9 a barrel to almost $120, driving up the price of the most essential commodities that are transported by road, a further hit on the working class.

Meanwhile the upward surge of inflation has split the Bank of England Monetary Policy Committee.

Previously it had opted to cut wages by allowing inflation to rocket and the pound to fall, saying that this would lead to an export-led recovery.

The opposite has happened. There is no recovery and there is no end to the inflationary spiral.

There are now three members of the committee who say that since this policy has failed, interest rates must rise at once, to douse the fires of inflation with plant closures, rising unemployment and house repossessions.

It is now mooted that there are to be three 0.25 per cent rate rises this year.

Andrew Sentance, a former CBI and British Airways economist as well as an external member of the committee, proposed a 0.5% point rise.

On the other wing of the committee Adam Posen, the American academic and external member, called for £50 billion more of inflationary quantitative easing, while five members have voted to retain the policy and not change it at all.

While the bankrupt publicly financed banks pay huge bonuses, price rises, job cuts and mass unemployment make life hell for the working class and the middle class.

This year 200,000 public sector workers are to lose their jobs, while rate rises will further boost unemployment and raise mortgage interest rates to the point where tens of thousands more people will lose their homes.

There is only one way out of this crisis for the working class and the middle class.

This is to organise a general strike to bring down the coalition and bring in a workers government and socialism.