Banks in the UK are slashing thousands of jobs as they attempt to restructure in order to cut internal costs. Stephen Little spoke to Dominic Hook, the national officer for the finance and legal sector at the union Unite, about the impact of job cuts on bank staff

In the wake of tougher capital requirements, lower revenues and sluggish economic growth, several UK banks have announced they are planning to shed jobs as part of restructuring measures to reduce operational costs and increase profits. RBI spoke with Dominic Hook, the national officer for the finance and legal sector at the union Unite, to discuss the impact of job cuts and what the union is doing to help its members.

RBI: What has been the impact of bank reorganisation on your members?

Dominic Hook: Since the crash in 2008, there have been 150,000 job losses in UK financial services. The front line staff have paid the price for the mistakes and the greed of the people who have wasted money by gambling, fraud through Libor and the mis-selling of PPI. We never get good news. We just hear more excuses from those in charge about job losses. You can call it reorganisation or making efficiency savings, but at the end of the day it is leading to more pressure on other members of staff, who become worried that the axe could fall at any moment.

RBI: What advice have you given to your members?

DH: Every situation is different. But obviously, every employee should be in the union as our voice is only as strong as the members that we have.

When we come to have discussions with employers about what their plans are, if we have members on the ground who can tell us what the real situation is, then we are in a much better position to represent their views. Fundamentally, if a bank is determined to go ahead and make cuts, we have to represent members where we can.

RBI: What has been the impact of job cuts on bank services?

DH: The banks will say that the quality of service will not fall, but inevitability it must because people are trying to provide the same service with fewer staff. You only need to look at the chaos of Royal Bank of Scotland’s (RBS) problems with not being able to get money into bank accounts and cash machines. All those problems they had last year show just how easy it is for a bank to go from working fine to not working at all.

There are only so many efficiencies you can make in an organisation before you have that kind of problem. That is why it is absolutely ridiculous for Lloyds to be announcing outsourcing IT support, when you only need to look across the high street to RBS to see the sort of problems they had with IT. IT is important to banks as it underpins everything, and making cuts to jobs inevitably has a negative effect.

Banks have to avoid the temptation to make an easy cut. Experience has shown there is resistance from customers when outsourcing call centres and the bank can also lose control. It is not necessarily a panacea and can be incredibly expensive. As a result, some banks have brought call centres back to the UK.

RBI: What is your position on the removal of sales-related incentive structures?

Dom Hook

DH: We have been calling for the removal of sales-related incentive structures for a long time because it leads to mis-selling. Even when it has been removed, the pressure to make sales remains, which can lead to bullying and all kinds of problems. It might mean that pay is not determined by it, but the stress is still there.

It is all about the ‘we have got to sell’ attitude, which is not necessarily what is best for the customer. They might not be incentivised on what they are selling anymore, but the burden on staff is still immense. I would not say it has solved the problem, but it is a step in the right direction.

Allied with the other of changes HSBC want to make and the axe still hanging over people’s heads in terms of staff cuts, people expect more job loss announcements at any moment. Despite the huge profits, people are worried about their jobs. That is why, when it comes to incentivising people, if managers are putting people under pressure to make sales, which are in turn linked to redundancies and all the other changes happening, it can be a pretty depressing place for bank staff.

RBI: What is your position regarding HSBC cancelling their final salary pension scheme for employees?

DH: Our members are deeply concerned about this at the moment because it will have a massive impact on them. It is a much better pension than what it is going to be replaced by, so we are in consultation with HSBC. Long-serving HSBC staff earning as little as £14,000 a year are having their pensions attacked, while the bank announces astronomical profits. In an act of sheer pettiness, the bank is snatching two days holiday a year from its staff and cutting sick pay.

The savings the bank is making from these changes are a drop in the ocean compared to its profits and the bonuses being awarded. It is comparable to the amount of money the CEO is getting. They are going to save the amount of money he is getting paid, so our members are very angry about that. HSBC can easily afford to provide decent pensions to its entire staff. 204 employees at the bank are pocketing bonuses almost four times more than the savings the company is making by attacking pensions and holidays. It is an outrage. There will be little sympathy for David Cameron’s and Boris Johnson’s opposition to a cap on bankers’ bonuses when banks like HSBC behave so unacceptably.

RBI: How successful has the union been when negotiating deals with banks?

DH: As a union we have negotiated some good deals. Our aim is to make sure there are no compulsory redundancies, only voluntary ones. In some places where there have been announcements about a particular office or site closing, we have managed to get jobs for all of the people placed there who did not want to leave on voluntary redundancy.
We came to some good arrangements with Barclays for example, where we managed to redeploy workers in other areas of the bank, but that does not stop the fact that jobs are going. Some people have taken voluntary redundancy as the lesser of two evils.
With the main banks we have pretty good arrangements and we can quite often make a difference. Some are better than others and we are normally consulted fairly early in any process about job losses. There was one case recently where a bank was proposing to make cuts. When we looked into it, they were actually employing temporary staff and employing people on overtime to deal with the workload. Their plans did not stand up to scrutiny and that is why it is important that the union is consulted early, because we know from our own members on the ground what is happening and what the real situation is, rather than someone making decisions sitting at the top of a tower in Canary Wharf.

RBI: What is Unite’s position on bank bonuses?

DH: The pay differential between the biggest salaries and the lowest is massive. Vast amounts of bonus tend to be for just a few people. Individual staff are getting relatively nothing and it is all the people at the top who are benefitting. And what do they get bonuses for? Many of them are getting bonuses for gambling and we have seen the problems this creates with everything leading up to the 2008 crash and what has occurred since.

Banks have been fined a fortune and there is scandal surrounding their activities, yet they are still paying bonuses. It is complete nonsense and that is why the recent EU proposals to cap bonuses and the referendum in Switzerland is so important. I do not agree with this argument that people will up stakes and leave. If you pay people properly for the job they are doing they will do it well. I think the reason people gamble so much is that they are paid a relatively low amount in terms of their total pay package and the bonus is massive. If people were paid a reasonable amount and the bonus was lower, people would not take such ridiculous risks.

RBI: Are the bonuses paid to bankers at Royal Bank of Scotland justified in light of recent staff cuts?

DH: RBS has slashed and burned the jobs of ordinary bank staff while the bosses turned a blind eye to price-fixing and mis-selling. 30,000 jobs have been lost since 2008. The jobs of bank workers in call centres and branches up and down the UK must not be sacrificed to pay for this gross mismanagement of leadership at RBS. Stephen Hester is right to want to reward staff in line with their contribution. That should mean capping bonuses for top bankers who caused the crisis, but it should also mean addressing low pay at the bank where many staff have to claim benefits to get by.

Instead of setting an example to the world and supporting a cultural shift in the banking industry, Stephen Hester refuses to back the EU cap. As the head of Britain’s biggest bank he should be showing more leadership. Any bonuses ought to be concentrated on the low-waged staff who have worked tirelessly to save the bank’s reputation and deliver customer care. They are the true deservers of any rewards.

RBI: What future changes need to made in the banking sector?

DH: High street banks are not there to make massive profits through gambling and risky business, they should be there for the customer. It is clear banks are not lending to small businesses in a way which they should be, which is having a drastic effect on the economy. Retail banking needs to be separate from the investment side and it needs to be done properly. The banking reform bill needs to be built upon to make that much better. The time scale is also too far away.

There is a real case for a national investment bank as the banks have failed to invest in small businesses. Given that we own 81% of RBS, it would be a real shame to see it privatised in some great giveaway when there is a lot of opportunity there to have a state-run investment bank that could do a lot of good.

Ed Balls recently talked about people being on bank boards who are ordinary workers. We strongly believe trade union reps should be on remuneration committees. I think having the voice of ordinary workers would be a good thing when deciding bonuses.