Transparency on high-end pay is good for Whitehall but not yet for the City – that is the conclusion emerging from the Treasury.
But what about the Lib Dems? Weren’t they billing themselves as the slayers of City excess? Tackling “obscene” banker pay was one of Nick Clegg’s top four priorities in the election campaign.
Yet it seems the element of the four point plan where the Lib Dems have made least progress.
Just compare what has happened to the proposals Clegg unveiled during the election.
Cash bonuses? Uncle Vince says £2,500 is your limit. Board level bonuses? Banned outright. (Vince made a joke about how the bank directors can make do with free golf club membership.) Working at a loss making bank? No bonus at all.
There was more. The one measure that really stood out was transparency. Cable and Clegg wanted to require banks to publish the names of all staff on a pay and bonus package greater than the prime minister’s salary. This would not only have ensnared top traders — it probably would have included their PAs as well.
When we asked Clegg about this recently, he dismissed the question, saying the Walker review was being implemented. When we pointed out that the legislation had been delayed, he seemed a bit taken aback.
Now George Osborne wants to impose such transparency rules on high pay “internationally rather than unilaterally” — which is an all too transparent code for shelving the reforms. Sir David Walker, the City grandee who proposed the tighter disclosure rules, has given the chancellor some convenient cover.
What will Clegg do? This will be a fascinating test of Lib Dem resolve.
When the election was on, Clegg and Cable were always happy to put the boot into bankers. Clegg described the sector as “a vested interest, a clique, one industry holding a gun to the head of the British economy”.
He said British politicians had a “moral obligation” to act unilaterally to make the economy “safe” from reckless banks. Taxpayers are indirectly subsidising bankers and “have a right to know how much they are paid”.
Some of the Lib Dem proposals were never going to be taken seriously. But transparency is relatively cost free to implement. It is least the Lib Dems should be demanding, given their pre-election bluster. Yet even on transparency, it doesn’t even look as if they are putting up a fight.