Chancellor has nailed his colours to a crooked mast

It is not a uniquely British phenomenon, or a recent development. One recent estimate says that, between them, non-financial companies in the developed world have cash in hand to the tune of $8 trillion. Thanks to falling real wages, cuts to workers' benefits and systematic tax avoidance, they have been building up this hoard for years.

So here's Rolls Royce, proud British builder of the finest aircraft engines. We told the story yesterday: £1.4 billion in pre-tax profits and not a penny paid to the Exchequer. In fact, the company was given a £3m credit. While Tory MPs demand a cut in corporation tax in this month's Budget – to "encourage enterprise" – Rolls Royce solves its own problems.

The company maintains that it sells most of its products abroad and reduces its tax liability thanks to investment in research. It states, too, that it paid £218m in taxes abroad in 2012. In other words, by a rough calculation, it surrendered around 15% of that £1.4 billion to foreign jurisdictions. In his last Autumn Statement, George Osborne cut Britain's corporation tax, for those who pay, to 21%. As Americans say, do the math.

Here, then, is HSBC, an international bank that maintains headquarters and a corporate domicile in Britain. At £13.7 billion, its profits for 2012 were down by 6%. Last year, it was fined £1.2 billion for laundering money on behalf of murderous drugs cartels in Mexico and America. As banking outrages go, that one occupies a special category.

HSBC has nevertheless handed £1m bonuses to more than 200 staff, 78 of them in Britain, with a £7.4 million package for its chief executive, Stuart Gulliver. Part of that was a £1.95m bonus in the year the bank was named and shamed. Mr Gulliver was not in charge during the money laundering, it should be said. Still, this is a strange display of corporate contrition.

Certain of HSBC's competitors have meanwhile been exposed and punished, after a fashion, for their parts in the Libor scandal. Some of them, publicly owned, have had their fines paid, in effect, by the taxpayer while continuing to distribute bonuses when the international demand for investment bankers is as low as it has been in a generation.

Elsewhere, new PPI claims are running at an astonishing 2000 cases a day simply because the banks, having lost in court, refuse to settle with customers they conned and mean instead to swamp the Financial Ombudsman Service. You could call it the PPI-Plus scandal. The fact remains that "mis-selling" – the implication of inadvertence is hilarious – has cost the banks £15 billion and counting.

Never fear. There's always quantitative easing, by which the state secures dodgy assets. It is otherwise known as free money. Should Sir Mervyn King, the Governor, have his way £400 billion will have been created by this means before the year is much older. If that's not enough – and how much is ever enough? – there is Mr Osborne's next best wheeze, the Funding for Lending Scheme.

Briefly, the banks were to be granted money at extremely low rates to help them lend to small firms and individuals. Some £14 billion duly left the Bank of England as the public's gift to private enterprise. In the last quarter of last year, nevertheless, the banks managed to reduce their lending, collectively, by £2.4 billion while rebuilding balance sheets. Now that's welfare dependency.

A long preamble. It leads us, nevertheless, to yesterday's spectacle of Mr Osborne fighting for Britain in Brussels. Or rather, fighting to avert the possibility that a handful of banking Britons might have to toil under the European lash with bonuses pegged to 100% – rising to 200%, if shareholders agree – of salary. Even the Swiss have just voted in a referendum for an equivalent proposal. Even those who suspect, rightly, that banks will simply bump base salaries to compensate besuited serfs are struggling to defend our Chancellor.

Damage to the City? Corporate flight? The myth is persistent. Even HSBC, with most of its business and profits in the Far East, has stopped pretending it might move to a new oriental home. At the end of last year, in fact, the foreign banks that create vitality in London were making their real fears clear to the Treasury. The City is at the heart of euro trading. What truly worries such institutions is David Cameron's half-promise of an in-out European referendum.

More than 160 EU financial institutions have headquarters or offices in London. Would Deutsche or BNP Paribas stick around if the Tories take us out of Europe? Would they argue seriously with the collective will of the EU's finance ministers and national governments? With investment banking in a trough and pickings slim, would even Wall Street put up a fight for long? Not for the first time, Mr Osborne is being ridiculous.

You could as well say he is showing where his loyalties lie. The European Parliament's call for a pegging of bank bonuses is an attempt to remove incentives for "recklessness". Yet the Chancellor, having swallowed the evidence of sheer criminality, having struggled each day to balance the books while money flows endlessly to the few, having seen all the promises made and broken, sticks to his task. Note the fact.

He is the representative of a dysfunctional, self-serving and criminal industry that has caused immense harm to its host nation. Imagine: bonuses of only 100% to 200% of salary. Mr Osborne's Coalition Government never tires of invoking the national interest. If the statement is serious, the issues of bankers' rewards, tax avoidance and public dole to the rich are in everyone's interest.

The Chancellor, otherwise a public servant, doesn't see things that way. Your next banking crisis will be along shortly.