Govt unity questioned in delayed bank talks
By Peter Wozniak
A ministerial meeting with Britain’s biggest banks has been overshadowed by the stormcloud hanging over the business secretary.
The talks were postponed yesterday when the chancellor was stuck in New York after he became a victim of the adverse weather conditions disrupting air travel.
Debate over the Christmas round of bank bonuses was to be the subject of today’s planned talks, but Mr Cable’s comments, indicating his desire to push further on bank reform than his Conservative colleagues, have cast doubts over the government’s unity on the issue.
It is understood that Mr Cable and Mr Osborne called for the financial sector to refrain from excessive payments in the next bonus round, with the threat of additional action against banks if they fail to do so – including publishing high pay.
Insufficient lending to small and medium sized businesses was also expected to be on the agenda.
The meeting may however have been dominated by Vince Cable’s public acknowledgement that there are disagreements among the coalition partners regarding how far to go in the government’s stance on banks.
He told the undercover reporters from the Daily Telegraph that Tory ministers did not share his desire to take a “very tough approach” on remuneration. It has been suggested that Mr Osborne favours a more modest policy waiting for international agreement on financial regulation.
In a demonstration of his desire for strict measures, Mr Cable implied on BBC1’s The Andrew Marr Show at the weekend that the possibility of further taxation remained on the table.
“We can’t go through the winter series of bonuses without real restraint and social responsibility,” he said.
“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, various ways of doing this.
“But we would rather they accepted that they had wider obligations to British business and to the public.”
In recent weeks, ministers have upped the intensity of rhetoric on enforcing restraint on bank bonuses.
But official government policy on the banks remains unclear beyond a £2 billion levy. Ministers are currently awaiting a report from an independent commission due to be published next year.
