Wide screen devices may view this page better by clicking here
Arguments for socialism :: Northern Rock
All Arguments for socialism subcategories:
Northern Rock's announcement of 2,000 job cuts - around one-third of its workforce - has numbed workers. Although Northern Rock workers we have spoken to were aware that job losses were imminent, they are gutted at the scale of cuts.
One worker told us: "All sorts of memos about redundancies are flying around. The sales department ceased trading on Friday and they've been told they have three months' notice. An office full of between 250 and 300 people, the biggest department. Just to watch them go is demotivating. Everything is uncertain."
Northern Rock had grown rapidly to become Britain's fifth biggest mortgage lender and the biggest private-sector employer in the north east.
Most of the 2,000 job cuts will happen within a year, and will be primarily shared between the Gosforth HQ in Newcastle and the Sunderland call centre in Doxford Park.
One worker is reported in the Daily Mirror as saying staff morale was so low you could be "killed in the stampede" for voluntary redundancies. However, for the majority of Northern Rock's young workforce there is a bleak future as the impact of the credit crunch takes hold across the financial sector.
Prior to the recent bank run, Northern Rock was regarded as a local success story. One reporter called it: "Globally successful, intrinsically Geordie". Not only is Northern Rock's logo on billboards across the north east, but it is also seen on thousands of Newcastle fans' football tops (the bank is a sponsor of both the football and rugby team).
In July, just weeks before people were queuing to get hold of their savings, a local paper proclaimed: "It's boom time for Northern Rock".
The bank's assets were valued at £113 billion and the deputy chair reported: "We are confident about the long-term future of the Northern Rock." This was to be a win-win situation - for bosses, shareholders, staff, and the charities the Northern Rock foundation funded. However, behind this facade the future was dire.
According to the Mirror, Northern Rock directors 'raked in' £6.5 billion by selling shares just months before the bank crashed. Chief executive Adam Applegarth is reported to have gained nearly £2.7 million in his 18 months of trading. It would take an employee earning £15,000 a year 180 years to earn this much money.
Also according to the Mirror, Applegarth has: "A £2.5 million country pile in Northumberland, a £250,000 flat on Newcastle's Quayside and a fleet of high performance cars."
At the same time as Applegarth and other directors were offloading millions of pounds of shares, employees and small investors were being encouraged to buy.
One woman, whose daughter works at Northern Rock spoke to The Socialist, saying: "Applegarth's off-loaded all those shares. He knew prices were about to plummet. He lives in a mansion - that should be confiscated!"
Whilst the bosses walk away whistling, ordinary workers whose jobs are being axed are facing an uncertain future. The worker we spoke to said: "The redundancy pay offered doesn't seem much. People with 10-25 years service are being offered a derisory amount."
Capitalism has had a deliberate policy of encouraging workers to take share options. This was started by Thatcher as an ideological tool and is now embraced by New Labour. While share prices were escalating, a section of workers were wooed into believing they had a stake in the company they worked for. Now this illusion is turning to dust.
The Socialist Party calls for compensation for Northern Rock's 180,000 small shareholders, which includes Northern Rock's workers and nothing for the fat cats who own 80% of shares, unless they can prove they need it.
For example, instead of the derisory sum the government will offer workers who gained shares when Northern Rock became a bank, they should be given the value of the shares at the time of demutualisation, plus the interest they would have gained if the money had been put in a Northern Rock saving account.
New Labour's nationalisation of the bank isn't about safeguarding jobs, or giving favourable deals to ordinary depositors and mortgage holders. Instead Brown and Darling see it as a temporary measure.
Unfortunately, Unite, the workers' union, has no strategy to fight these cuts. Unite should be calling for action to defend workers in the stricken bank. If this were to include lunchtime rallies in Newcastle and Sunderland city centres it would gain an echo from workers across the region and give confidence to Northern Rock workers to take the struggle forward.
Pressure must also be put on Unite, which is the single largest donor to New Labour, to disaffiliate and campaign for a mass workers' party. Imagine the difference if Northern Rock workers were backed by such a party, with elected MPs that used their position to put forward a fighting alternative.
New Labour's appointment of Ron Sandler as chair, a non-domiciled taxpayer, who is being paid a staggering £90,000 a month, has angered workers in the north east.
Sandler intends the bank to be brutally downsized, then handed on a plate back to profiteers. Capitalism will also use the opportunity to throw mud at the idea of nationalisation.
The Socialist Party's call for sacking Ron Sandler and our explanation of the need for workers' control and management of Northern Rock is gaining an echo. This, alongside the nationalisation of all the major banks into democratic public ownership, would pave the way for job security, and mortgages and loans that would be provided at low interest rates.
Arguments for socialism keywords:
Banking crisis (15)
Clause 4 (1)
Clause four (6)
Minimum wage (312)
New workers parrty (6)
Northern Rock (34)
Party funding (1)
Socialism 2007 (17)
Socialism 2008 (13)
Solidarity Scotland (1)
The Socialist (1167)
Them & Us (25)
Trade union organisation (7)
What we saw (38)
Workers press (1)
Working class (849)
Article dated 25 March 2008
The Socialist, weekly newspaper of the Socialist Party
Platform setting: =