Britain’s Fall of the House of Everything: Keep Calm and Carry On

LONDON (The Deal) -- Alas, poor London!

The City as we know it is coming to an end!

Not war nor pestilence have brought us to this terrible pass. The money changers at the temple and its crumbling masonry are the twin sources of this calamity.

Cry woe while the sun shines!

But when the weather turns, as it must, this being England, we shall do as we have always done: keep calm, huddle around a blazing brazier in the snow, warm our hands on a mug of hot tea and watch as the workmen move into the homes we have cherished for generations. Some of the money changers may head off for warmer climes, but we shall have the satisfaction of knowing that those who remain will have accepted a bonus cap in solidarity.

"We," here, is the Royal "we", the use of the first person plural pronoun that is the prerogative of her majesty. For it is Queen Elizabeth herself who is to be asked to leave her home while the workmen move in.

As her majesty's ancestor, Queen Victoria, once said: "We are not amused." And she was right.

Also poised for eviction are the 650 members of the House of Commons and the 790 or so members of the House of Lords, who sit and bicker in the Palace of Westminster as they make our laws.

Britain's great palaces are crumbling. Falling gargoyles and rotting balconies are a menace to life and limb.

Asbestos and ancient wiring, rat-infested tunnels, leaking pipework and dry-rot-riddled roof beams threaten the very fabric of the nation.

If lawmakers want to stay put in the neo-gothic parliament building while the work is done it will take more than 30 years and $9 billion to put things right. But we could save a third of the bill and get the job done in six years if they move out for the duration.

Repairing Buckingham Palace to make the place fit for a queen or a future king would cost a mere $240 million, which in the context of other infrastructure projects seems quite bearable. But there are plenty of Scrooges out there, especially curmudgeonly Scottish nationalists, who begrudge her the money and feel she should pay for the repairs herself.

"She won't really be on the street during the renovations," they cry. "She can live at Windsor Castle or Balmoral or one of her other homes, even as the government is cutting welfare payments and pushing the poorest Londoners out of their social housing."

Well, why not? The queen and her forbears have long led a peripatetic existence, flitting with their retinues from one palace or country estate to another according to the season. In former times, they would be put up and entertained at the homes and the expense of noble families: the dukes of this and the earls of that.

Disney fans will remember those scenes from Robin Hood, where the dashing young fox and his merry menagerie ambush the effete lion, King John, as he passes through Sherwood Forest in his palanquin on his way to sup with the wolfish Sheriff of Nottingham. Historically accurate to the last detail!

There would be a kind of poetic justice to Parliament having to follow the monarch around, now that it has taken all her power for itself. The Commons should spend a bit of time in the far-flung parts of the nation it represents, instead of passing its days in London isolated from the modern world in a gigantic Victorian folly.

The money changers, too, are on the move. Told it must separate its investment and retail banking operations, HSBC Holdings, Europe's biggest bank, is huffily moving the retail bank to Birmingham, England, 100 miles from London, and may sell it entirely.

The investment bank may move to Hong Kong or Singapore, as may Standard Chartered, its rival for the Asian purse, which in any case doesn't have any significant retail banking operations in the United Kingdom.

It isn't the gleaming towers of the Canary Wharf financial district that are in danger of collapse -- though the monstrous edifice that replaced one of HSBC's old City of London buildings has recently been dropping great metal bolts onto the sidewalk below -- but the nation's tax and pay structures that are driving the bankers offshore.

Even as those much-reviled parliamentarians are taking a pay rise to compensate for the loss of their lavish expenses, they are backing calls for bonus caps and clawbacks for the similarly despised bankers. The government is said to be contemplating cutting the top rate of tax -- for those who earn more than £150,000 ($238,000) -- to 40% from 45%.

It may even think again about further raising the banking levy, which HSBC has found particularly onerous. But Britain's regulators are determined to impose what the Treasury is happily calling the "toughest rules on bankers' pay of any major financial center."

The Prudential Regulation Authority and Financial Conduct Authority are jointly imposing a seven-year clawback period for senior managers, five years for staff who take material risks and are considering a full decade for the top tier of management. Those top managers would already have had to wait seven years for their bonuses to pay out but could still have to repay the money at any time in the next three years if the regulators discovered problems at the bank.

The clawback would even apply if the manager concerned had long since left the bank. All that on top of a European Union bonus cap (long fought by Britain, but finally accepted in the face of likely defeat in the European Court of Justice) which sets a limit on bonuses of 100% of salary, or 200% with shareholder approval.

Bankers, naturally, feel this is all a bit unfair. But consider how long it has taken for scandals such as the manipulation of the interest rate and foreign exchange fixes to be fully investigated.

How long has it taken for the effects on banks' balance sheets of earlier mistakes and misdeeds to be fully reflected? Few non-bankers would doubt the need for retrospective reassessment of whether a bonus was really deserved.

George Osborne, the chancellor of the Exchequer, suggested this month that the time for banker bashing was over and the time had come for Britain once again to be seen as "the best place for European and global bank HQs."

But regulators seem more attuned to the public mood.

As Bank of England deputy governor Minouche Shafik said during a recent online debate, hosted by the Financial Times: "Banker bashing will end when banks are safe and have good standards of conduct."

There will be something missing from London for the next few years as its great palaces are covered in scaffolding and the Queen and her ministers have to carry on their business elsewhere. And perhaps a little less bonus money will be sloshing around in the London property market, though it might not make a difference with all that laundered Chinese and Greek money still pushing up prices.

But as we huddle in the cold, eating roast chestnuts and pitying the tourists whose views of Big Ben and Buckingham Palace have been ruined, we will be sure that nothing will have changed forever. The monarchy marches on, Parliament will be back in the Palace of Westminster one day and the bankers will be holding us all to ransom as they always have.

God Save the Queen!

Read more from:

More from Markets

Tesla Jumps on Model 3 Expansion Hopes, China Trade Truce

Tesla Jumps on Model 3 Expansion Hopes, China Trade Truce

Apple Gains as U.S. China Trade Tensions Ease After Weekend Summit

Apple Gains as U.S. China Trade Tensions Ease After Weekend Summit

Global Stocks Rally as US-China Trade War Thaws; Dow Could Test 25,000

Global Stocks Rally as US-China Trade War Thaws; Dow Could Test 25,000

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO