Bank bonus battle lines drawn
By politics.co.uk staff
Vince Cable has called the banks’ enthusiasm to “fuel” their bonus culture “offensive”, but Labour says the coalition is not doing enough to confront the City.
The business secretary’s comments come as Britain’s financial services sector prepares for another week of criticism from Westminster, as Barclays announces its 2010 bonus pool.
The bank is expected to increase the amount of its bonus payments, despite the Project Merlin deal agreed alongside Lloyds, RSB and HSBC last week.
“These are extraordinarily large bonuses which most people cannot understand,” Mr Cable told BBC1’s The Andrew Marr Show.
“The banks are ultimately underwritten by the state, they effectively have a state guarantee. That’s what makes the enormous payments so offensive.”
Mr Cable called on the banks to deliver “radical” reform, continuing the Lib Dems’ strong rhetoric against the City.
“What we should notice at the end of it is the banks are more competitive and that they are safer and that they are not making large excess profits which then fuel the bonus culture,” he added.
“Those are the big changes that have got to happen.”
Labour’s shadow chief secretary to the Treasury Angela Eagle said the government could do much more to address the banks, however.
She pointed out the Tory-led government was giving the banks a tax cut this year, while refusing to repeat last y ear’s £3.5 billion bank bonus tax.
“We would use the money raised to support the jobs and growth Britain badly needs this year,” she commented.
“With unemployment and inflation both now rising and the recovery stalled it’s increasingly clear George Osborne’s reckless plan to cut too far and too fast isn’t working.
“He needs a plan B that puts jobs and growth first, because getting the economy moving again and more people into work is the best way to get the deficit down.”
