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| Tories want end of bonus culture | |
| (about 2 hours later) | |
| A Conservative government would seek to stop the payment of large bonuses across the banking system, shadow chancellor George Osborne has said. | A Conservative government would seek to stop the payment of large bonuses across the banking system, shadow chancellor George Osborne has said. |
| He told the Guardian that handing out big awards backed by state guarantees was "unacceptable", even for banks that were not part-owned by the taxpayer. | |
| Such guarantees were meant to allow banks to rebuild balance sheets and aid lending, not reward bankers, he said. | Such guarantees were meant to allow banks to rebuild balance sheets and aid lending, not reward bankers, he said. |
| Mr Osborne also renewed his calls for a new financial regulatory system. | Mr Osborne also renewed his calls for a new financial regulatory system. |
| "It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees," he told the paper. "It must stop." | "It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees," he told the paper. "It must stop." |
| "These banks need to live in the real world, where the country's in a deep recession, and where the taxpayer has spent billions of pounds, not just bailing out some failed banks, but also underpinning the rest of the banking system," he continued. | "These banks need to live in the real world, where the country's in a deep recession, and where the taxpayer has spent billions of pounds, not just bailing out some failed banks, but also underpinning the rest of the banking system," he continued. |
| You cannot privatise the gains and socialise the loss in the way that has happened George OsborneShadow chancellor | You cannot privatise the gains and socialise the loss in the way that has happened George OsborneShadow chancellor |
| The hundreds of billions of pounds of state guarantees, such as those provided through the Bank of England special liquidity scheme, were supporting all banks, he argued, and therefore they should be prevented from using them to pay staff huge rewards. | The hundreds of billions of pounds of state guarantees, such as those provided through the Bank of England special liquidity scheme, were supporting all banks, he argued, and therefore they should be prevented from using them to pay staff huge rewards. |
| "The reason those guarantees are in place is not so the bankers can pay themselves large bonuses," he said. | "The reason those guarantees are in place is not so the bankers can pay themselves large bonuses," he said. |
| "They are in place to keep a banking system afloat during a recession, and to allow the banks to rebuild their balance sheets, so they can function again, and start lending out in a normal fashion. | "They are in place to keep a banking system afloat during a recession, and to allow the banks to rebuild their balance sheets, so they can function again, and start lending out in a normal fashion. |
| "If it's the case that banks are using those guarantees and actually engaging in pretty low-risk activity and making huge profits on the back of it, and then paying huge bonuses, I think action needs to be taken." | "If it's the case that banks are using those guarantees and actually engaging in pretty low-risk activity and making huge profits on the back of it, and then paying huge bonuses, I think action needs to be taken." |
| Powerful regulator | Powerful regulator |
| The Conservatives have pledged, in effect, to scrap the current regulator, the Financial Services Authority, and hand its powers to a strengthened Bank of England. | The Conservatives have pledged, in effect, to scrap the current regulator, the Financial Services Authority, and hand its powers to a strengthened Bank of England. |
| Mr Osborne argued a strong regulator would not have allowed bonuses recently awarded to staff at Barclays - a bank that did not receive a direct injection of taxpayers' cash. | Mr Osborne argued a strong regulator would not have allowed bonuses recently awarded to staff at Barclays - a bank that did not receive a direct injection of taxpayers' cash. |
| "In the end, the regulator has to have the power to tell banks to stop doing things that they think are detrimental to the health not just of that bank, but the broader banking system. And I think they should exercise that power," he said. | "In the end, the regulator has to have the power to tell banks to stop doing things that they think are detrimental to the health not just of that bank, but the broader banking system. And I think they should exercise that power," he said. |
| The shadow chancellor went on to argue that short-term profits in the banking system should not "come at the expense of long-term costs for the rest of society". | The shadow chancellor went on to argue that short-term profits in the banking system should not "come at the expense of long-term costs for the rest of society". |
| "Therefore we need a much more responsible and properly regulated banking system. You cannot privatise the gains and socialise the loss in the way that has happened," he said. | "Therefore we need a much more responsible and properly regulated banking system. You cannot privatise the gains and socialise the loss in the way that has happened," he said. |
| The Tories are not alone in calling for changes to the way bank staff are rewarded. | The Tories are not alone in calling for changes to the way bank staff are rewarded. |
| On Thursday, Lord Mandelson said excessive pay and bonuses for bankers should not be allowed to drive risk-taking in the City. | On Thursday, Lord Mandelson said excessive pay and bonuses for bankers should not be allowed to drive risk-taking in the City. |
| On Wednesday, the FSA announced that bankers' pay deals were to be linked more closely with long-term profitability under new rules. | On Wednesday, the FSA announced that bankers' pay deals were to be linked more closely with long-term profitability under new rules. |
| It said bonuses should not be guaranteed for more than a year, and that senior employees should have their bonuses spread over three years. | It said bonuses should not be guaranteed for more than a year, and that senior employees should have their bonuses spread over three years. |