Unsurprisingly all George Osborne's talk of being tough on bankers' bonuses has turned out to be empty rhetoric, as reported in today's Guardian. It is now clear that the government has little real appetite to tackle the City's risk-taking bonus culture.
However, despite attempts by the government to water it down, new EU legislation is now in place to limit the cash payments that have in the past rewarded bankers for short-term risky investments. These new rules, taken through the European Parliament by Labour's Arlene McCarthy MEP, aren't about bashing bankers. They are about putting long-term interests ahead of short-term risks.
The rules specify that only around a quarter of the bonus can be paid upfront in cash, while the rest must be deferred and will only be paid out if investments perform as expected. In addition banks must establish limits on bonuses in relation to salaries, to help limit the disproportionate role played by bonuses in the financial sector.
The government has talked tough but done little, and it is Labour that has delivered the constructive reforms. While we're in opposition in Westminster, Labour MEPs are still in a position to make fair and practical legislation for the UK.
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I always read your blog, Glenis, because it's to the point and always incisive. I know people have already said this at meetings you've run, but I just wish that Shadow ministers in Westminster would give the points you make here the airing that they deserve to the London media.
ReplyDeleteIt's unsurprising to me that this government 'has talked tough and done little' as it would mean a massive U-Turn on their 'lets blame the labour government for the financial crisis and protect our core supporters'. This is despite the fact that the crisis was created by the reckless speculation and gambling of the few, to the detriment of the masses. I understand that bonuses are an important part of how the financial sector operates, and I strongly believe justifying your salary, just like in any other sector should be part of the banking system.
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