Back in December this blog took a highly sceptical approach to Nick Clegg’s threat to crack down on big bank bonuses. The next day we revealed that the coalition had in Europe been urging the EU to resist calls to strengthen an existing G20 agreement on bonuses.
Now the consensus is that – short of a sudden U-turn – banks are going ahead with their original plans.
George Osborne is currently in the House of Commons taking an “urgent question” from Alan Johnson, his shadow, over the issue. Osborne says the government is still in talks with the banks. “Nothing is off the table,” he told MPs.
But then he appeared to suggest that the current plan for a bank levy (of about £1.25bn this year) may be as far as the government goes. “If the opposition party that created this mess has a better idea, let’s hear it.”
He said that he wanted RBS, which is 70 per cent state owned, to have smaller bonus pot than last year. That is likely with or without Osborne’s threats given that all banks are expected to make slightly lower payouts this time around.
Incidentally, one of Bob Diamond’s most striking comments this morning was his revelation that ministers have not asked him to take a smaller bonus.
“People will be appalled to learn that for all the tough rhetoric, the government has never asked the Barclays chief executive to reduce his bonus,” says Brendan Barber at the TUC. “The cosy conversations taking place behind closed doors are the opposite of what voters are being told.”
UPDATE at 4.30pm: George Osborne just said Diamond should be paid less than he was last year. Except that the Barclays boss didn’t take a bonus last year….
Jim Pickard
Kiran Stacey