Nick Clegg has put a lot of effort into assuaging City nerves over a hung parliament. Britain’s credit rating will be safe in Lib Dem hands, he insists. But, even if that is true, Britain’s investors and bankers will still be poorer for it. Given half the chance, Clegg and Vince the Bonus Snatcher want to plunder the City, break up the big banks and mount Gordon Gekko’s head on a spike.
In Westminster it’s open season on bankers. Osborne, Mandelson — everyone has had a pop. But the Lib Dem plan unveiled today is the high-watermark, the Daddy of all City crackdowns. Most bankers will probably be thinking: Why should we care? Well, if there is a hung parliament, these reforms will be one of the top four Lib Dem priorities.
In Lib Dem Britain banks will pay a 10 per cent levy on profits. Investment operations will be split from retail banking. The City, in Clegg’s words, will be “relatively smaller in relation to the British economy”. There would be no rush to sell off the government stakes in RBS and Lloyds.
And there is a five step plan for pay restraint to win the banking vote:
1. No cash bonuses: £2,500 is your limit. You’ll have to wait 5 years to redeem them. And Clegg will stop you from using them as security in the meantime.
2. Ban on board level bonuses: bank directors will have to make do with salary and “golf club membership”.
3. No bonuses at loss-making banks: if you’re making millions and but your bank is making a loss, you won’t be allowed a discretionary bonus. A real vote winner at RBS.
4. Tell everyone what you’re paid: publish names of all bankers earning more than £200,000. (Every banker, of course, would then be appalled that he’s earning less than Fred X and ask for a pay rise.)
5. Punish the directors: If the bank breaks guidance on bonuses, the board members are personally fined.