Standards in public life are lower than ever

Scarcely a day goes by without some impropriety or scandal involving bankers, senior business executives, police, MPs or celebrities in one guise or another.

At the weekend it was a senior counter-terrorism detective found to be trying to cash in on the police investigation into the News of the World phone-hacking.

Then there was a reprise of the bribery surrounding the colossal £43 billion al-Yamamah arms sales to the Saudis, this time revealing the former BAE chairman acquiring two luxury Mayfair penthouses now worth £6 million as part of the deal.

Previously we had been regaled for months with constant revelations of flagrant tax avoidance by international companies, wealthy fat cats and a string of celebrities. Before that there were the enormous crimes of Libor rigging and the PPI mis-selling bank scandals where compensation now tops £10bn.

And today we were told the grim details of how it was that 400 to 1,200 patients over four years met unnecessary deaths at Mid-Staffs Hospital.

Read all of that, and much more, and it's clear there's now something deeply rotten in the state of Britain.

Two issues stand out. One is that those responsible all too often escape with impunity.

Those benefiting from the kickbacks from the Saudi arms deal were protected when Tony Blair deliberately, and improperly, shut down the Serious Fraud Office investigation.

The MPs most at fault over the expenses scandal - those who flipped the designation of their second homes in order improperly to double their procurement of public funds, including several members of both front benches - were never held to account.

The chief executives of RBS and Barclays were finally forced out, but never prosecuted or disqualified from office as a result of malfeasance on their watch.

The killings of the innocent Jean Charles de Menezes and of Mark Duggan - which led to five days of national rioting - by the police, let alone the 86 deaths at the Hillsborough stadium, have never led to any prosecutions of police officers.

The second point is of course to ask why this corruption of public life and morals has occurred.

What is troubling is that, while such episodes have occurred in previous decades or centuries, it is the scale and frequency of such scandals which is so disturbing as well as the relative insouciance with which they are so often treated.

Undoubtedly a part of the reason is the all-encompassing commercialisation of life under the market free-for-all of neoliberal capitalism which has steadily drained away the integrity and morality on which any civilised culture depends.

Time for the Labour Party to lead the call for a new framework of honesty and trust in our public life.

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Quietly, with no fanfare and no headlines, the banks are steadily chipping away at the measures, meagre and delayed as they already are, designed to prevent another global financial crash.

First, the capital adequacy ratios - the financial reserves that have be held to prevent or absorb any run on the bank that might develop - have been drastically weakened as a result of bank lobbying behind the scenes.

At the time of the great crash of 2008-9 the level of tier one capital that had to be held in relation to a bank's total risk-weighted credit exposures stood at 2.5 per cent, which is fatally low.

The new Basel III level set by international regulators in 2011 - revised slightly in June 2012 - was still only 4 per cent, well short of the 7 per cent or even 10 per cent demanded by reformers.

Thus it took four years after the crash for even the slightest, and inadequate, tightening of the rules. However, worse was to follow.

The pusillanimity of the new capital reserve requirements was accompanied by almost unbelievable procrastination.

It was decided that the new rules would not apply till 2019, as though the risk of a fresh crash could attend upon the convenience of the bankers.

As if this was not bad enough, George Osborne, desperate to get the banks lending to industry to restart growth, conceded to the banks that the ratio would be reduced from 4 per cent to 3 per cent, thus reopening the very real risk of another disastrous run on a weak bank.

The banks, true to form, responded to this inordinate and dangerous concession by increasing their lending to industry virtually not at all.

To cap it all, the capital adequacy ratio isn't anyway fit for purpose by itself since under the Basel reform proposals it wasn't combined with a leverage ratio which would predict the probability that a bank would fail.

Last month the rules were weakened further. The so-called liquidity coverage ratio - the second arm of the Basel III reforms requiring banks to hold enough cash and easy-to-sell assets to enable them to survive a short-term crisis - was softened by allowing them to hold a wider, and easier, variety of liquid assets towards their buffers and also by changing the calculation methods in ways that significantly reduce the liquidity buffers that have to held.

Now even the ring-fencing itself between the retail and investment arms of banks, as proposed by the Tory-commissioned Vickers report, is being seriously threatened.

This British report, which has still to be implemented nearly six years after the crash, was reinforced by very similar recommendations of the EU Liikanen report last October.

However, it's not as though ring-fencing is anyway an adequate solution.

Ring-fences, as opposed to a clean statutory break, are just too porous. Loopholes can easily be turned by City tricksters into a bolt-hole.

Nevertheless that still hasn't stopped the bankers demanding that ring-fencing is a step too far and should be quietly abandoned. Are the regulators and politicians utterly spineless?

• Michael Meacher is Labour MP for Oldham West and Royton. Read his blog at www.michaelmeacher.info/weblog