Wednesday, May 09, 2012

Two Worlds

Canary Wharf is the base for companies that pay some of the highest salaries in the world. Nine of the world’s biggest banks trade, lend and advise clients there. They include Barclays and HSBC Holdings Plc (HSBA) of the U.K., Switzerland’s Credit Suisse Group AG (CSGN) and the European operations of U.S.-based Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley (MS) and Bank of America Corp. (BAC). It is where the wealthy 1 percent enrich themselves by avoiding tax, racking up debt, selling risky investments and using public funds for bailouts. The British government propped up banks with 1 trillion pounds in capital and guarantees. They do so at the expense of the remaining 99 percent.

The surrounding London neighborhood of Tower Hamlets has had  £72 million  from its budget  the deprived boroughs of Hackney and Newham were also cut while relatively wealthy Richmond-upon-Thames’s was reduced the least). Tower Hamlets has one of the highest rates of young people receiving jobless benefits in London, the highest proportion of poor children and older people in England and the worst child poverty in the U.K.

Income inequality among working-age people has risen faster in the U.K. than in any other wealthy Western country since 1975, according to the Organization for Economic Cooperation & Development.

Many of Canary Wharf’s 95,000 workers travel to and from the skyscrapers on trains that pass under or over the 240,000 (20% Bangladeshi) residents  of Tower Hamlets. A four-lane highway and railway acts to separate Canary Wharf from the rest of the borough. Canary Wharf’s has shiny new underground malls. Tower Hamlets has grubby streets and empty spaces covered with graffiti one being: “Sorry! The lifestyle you ordered is currently out of stock.”

Tower Hamlets takes its name from the villages that surrounded the Tower of London and was the site of gatherings during the Peasant’s Revolt of 1381. The borough stretches north to the stadium built for this Summer’s Olympic Games (none of the events will take place in Tower Hamlets) and west to the City of London, the ancient financial district built around St. Paul’s Cathedral and the Bank of England. When people in Canary Wharf were asked which borough they were in many didn’t know.

“It’s a bit strange that this is all part of Tower Hamlets, because it’s not poor,”
said Eloise Hillman, an IT consultant, “It’s not run- down, and it’s banking and financial and rich.”

From the other side of the tracks Barbara Williams says. “They think they’re above me, that I’m not worthy to share the same air as them,” says Williams, an unmarried mother of two. She has lived on government welfare since bearing her first child at the age of 17. “We didn’t cause the crisis,” Williams says. “The government and the people with the high-paid jobs caused it.”

With no savings and £13,000 of debt, Williams estimates she will have to earn £24,000 a year to maintain her standard of living without government benefits. In April, she found a job at a company that provides holidays for the disabled. It pays £16,000. The aim of the welfare overhaul is to “recreate a culture of independence and self-reliance,” said David Freud, the government minister for welfare reform who is a great-grandson of Sigmund Freud and a former UBS AG (UBSN) investment banker, in a speech in April.. The system has trapped people in joblessness and benefit dependency, he said. 

John Jones sees the benefit changes differently. Wounded twice serving in the Royal Navy during World War II, he worked 50 years as a plumber and paid taxes to fund the British welfare state. Now blind, with prostate cancer and arthritis of the hands, the 91-year-old says he feels let down. The borough council will discontinue his midday home-help visit, Jones says. That means no warm food or drink until evening. “She said it’s all to do with the money,” says Jones

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