Clegg and Cable go on the offensive over ‘ludicrous’ bonuses
By Peter Wozniak
Nick Clegg and Vince Cable have warned that the government reserves the right to take more stringent measures against banks if they continue to pay “unjustified” bonuses.
Questioned over the coalition’s economic plans on the Today programme, the deputy prime minister launched into a full-throated attack on tax avoiders and the bonus culture.
“If the banks pay themselves unjustified bonuses, we reserve the right to take very serious action on that,” he warned.
Mr Clegg was joined in his attacks on the banking sector by business secretary Vince Cable, who expanded upon the deputy prime minister’s statements at a fringe event at the Lib Dem conference.
Commenting on initial proposals to force banks to publish high-level bonuses, Dr Cable went further to state: “At the other end of the scale, there are potentially quite tough sanctions in terms of tax policy.”
The business secretary warned banks that the government would not “stand idly by” if banks continued to pay out “offensive” bonuses at a time when the public is suffering the impact of severe spending cuts.
“Banks have got to understand… the government has a variety of mechanisms available,” he threatened.
Given the scale of spending cuts about to hit the public sector, the government appears keen to take a hard line on bonuses, which continue to arouse a great deal of public antipathy.
A one-off levy on banks of £8bn survived the coalition agreement, while a commission led by the chancellor is currently reviewing the regulation of the banking system as a whole.
Mr Clegg will also want to reassure his party’s rank-and-file during their conference that the Lib Dem leadership is pushing for more stringent action on the banks, given the manifesto commitment to break up retail and investment banking.
The deputy prime minister added: “It is incredibly important that the banks understand that you cannot possibly award yourselves ludicrous, sky-high bonuses in an industry that has been bailed out by the taxpayer when those same taxpayers are now having to make very serious sacrifices in their own lives.
“If you abuse the generosity of taxpayers, who have provided both directly and indirectly a massive infusion of public funds to bail you out, by awarding yourselves bonuses which will appear as almost gratuitously offensive, then clearly this government won’t be able to stand idly by.”
The Liberal Democrat leader has now left his party’s conference in Liverpool to attend a UN gathering on international development.
The issue of curbing bankers’ bonuses is a popular cause, and the government will want to foster the impression that it is cracking down on the ‘bonus culture’, especially as the spending review begins to bite.
