We reported yesterday that David Cameron had joined Nick Clegg in warning of new action against banks which did not show bonus restraint.
David Cameron warned banks on Friday that they faced higher taxes if they continued to pay “unjustified” bonuses, adding to a growing political and regulatory pressure on the City before the industry’s bonus season early next year.The prime minister, speaking after a European Union summit in Brussels, said that the public found such payments “galling”, adding: “Every decision the banks make like that makes it more difficult to keep a tax regime that they might favour.”
Vince Cable’s comments on today’s Andrew Marr show this morning continued in the same vein. But if you listened carefully the words indicated a threat rather than an imminent crackdown.
“If they don’t behave, if they don’t take account of their wider responsibilities the government has as a possibility some form of taxation,” said Cable.
Understanding the government’s stance would be a lot easier – as I pointed out on Friday – if they could indicate what they want from the banks, which are already heading for a lower bonus payout than last year. A bit less than last year? Half that figure? Ten per cent? For now it is not clear.
As for the opposition, what should we make of Alan Johnson’s suggestion that last year’s one-off bank levy could be made permanent? Is it credible? Is it official Labour policy?
Johnson told Sky:
Last year we introduced a tax on bankers’ bonuses; it pulled in about £3.5bn. Nobody fell over, nobody went abroad, all the kinds of things that we heard that would happen. So you know there is more money to be taken from banks. Particularly when you look as a fair share not as retribution; as a fair share to getting the fiscal deficit down.”
The counter-argument is that the banks only stayed onshore was because they knew it was a one-off; to regularise the levy could change their calculations.
Meanwhile Cable is still keen for banks to enforce new disclosure rules put on the statute book by Labour – requiring them them to list how many staff (albeit unnamed) received £1m-plus bonuses.
In this respect he is at odds with George Osborne, the chancellor, who last month watered down the rules – as revealed in the FT by George Parker. Which makes this a genuine spat at the top of government.