This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/uk_politics/8325302.stm

The article has changed 10 times. There is an RSS feed of changes available.

Version 4 Version 5
Tories urge bank cash-bonus limit Tories urge bank cash-bonus limit
(30 minutes later)
High Street banks should be banned from paying bonuses of more than £2,000 in cash, the Conservatives have said.High Street banks should be banned from paying bonuses of more than £2,000 in cash, the Conservatives have said.
Shadow chancellor George Osborne argued that the banks should be allowed to give out large bonus payments only in the form of shares in the company.Shadow chancellor George Osborne argued that the banks should be allowed to give out large bonus payments only in the form of shares in the company.
The Tories claim this could free-up up to £20bn which could then be lent to businesses and consumers.The Tories claim this could free-up up to £20bn which could then be lent to businesses and consumers.
But the Treasury accused Mr Osborne of "hypocrisy", adding the Tories had not backed plans to support businesses.But the Treasury accused Mr Osborne of "hypocrisy", adding the Tories had not backed plans to support businesses.
Many believe big bonuses prompted excessive risk-taking at banks which contributed to the financial crisis.Many believe big bonuses prompted excessive risk-taking at banks which contributed to the financial crisis.
'Emergency plan' 'Common sense'
Last week, the Centre for Economics and Business Research said City bank bonuses would hit £6bn this year, up from £4bn in 2008, because of rising profits and less competition. The Centre for Economics and Business Research has said City bank bonuses could hit £6bn this year, up from £4bn in 2008, because of rising profits and less competition.
In a speech at Reuters, in Canary Wharf, Mr Osborne said such payments would "make the credit crunch worse". Addressing an audience at Reuters, in Canary Wharf, Mr Osborne said there should be a "full stop" to such payments.
He said it was vital that "profits are used to support lending, not big bonuses". He said: "It was a year ago that I first warned that the money taxpayers provided to support bank lending must not be diverted into bonuses. A year later, the banks are making billions in subsidised profits.
"But instead of using these profits to lend more and get credit flowing again, the banks are threatening to pay out billions in cash bonuses instead. If this happens it will make the credit crunch worse."
We have stopped short of banning all bonuses for retail banks because it is unworkable Liam Byrne, Treasury ministerWe have stopped short of banning all bonuses for retail banks because it is unworkable Liam Byrne, Treasury minister
The move to limit cash bonuses, described by the Tories as an "emergency" plan, would be temporary and would work alongside the new agreement signed by the banks and the Financial Services Authority (FSA). He added: "We need to take emergency steps to support bank lending and move the economy forward this winter. The banks have to understand that we are all in this together."
Mr Osborne also said: "The politics of envy will play no part in our plans. But we do need the politics of common sense."
The move to limit cash bonuses would be temporary and would work alongside the new agreement signed by the banks and the Financial Services Authority (FSA).
It would only apply to High Street retail banks, which means investment banks would be exempt.It would only apply to High Street retail banks, which means investment banks would be exempt.
However, the proposed change would apply to the investment arms of banks that also lend to consumers.However, the proposed change would apply to the investment arms of banks that also lend to consumers.
Mr Osborne earlier told the BBC: "Most of these High Street banks are large investment banks... They should be lending out across the economy. They shouldn't be paying out large bonuses."
He added: "You could still pay bonuses, but pay them out in shares in the company, so that if the company does badly you don't get rewarded."
Dividing bonusesDividing bonuses
It is thought that the Conservatives would seek to protect bonuses of less well-paid staff who work in bank branches, so would allow bonuses of less than £2,000 to be paid in cash. It is understood the Conservatives would seek to protect bonuses of less well-paid staff who work in bank branches, so would allow bonuses of less than £2,000 to be paid in cash.
Mr Osborne said the plans would not affect "branch staff on £12,000", but the better-paid workers, sometimes on six-figure bonuses.Mr Osborne said the plans would not affect "branch staff on £12,000", but the better-paid workers, sometimes on six-figure bonuses.
The head of the FSA, Lord Turner, expects banks to spell out soon how their bonuses will be divided up.The head of the FSA, Lord Turner, expects banks to spell out soon how their bonuses will be divided up.
The Treasury criticised Mr Osborne's demands as posturing.The Treasury criticised Mr Osborne's demands as posturing.
Liam Byrne, chief secretary to the Treasury, said: "Mr Osborne's hypocrisy beggars belief. The Tories have fought against every plan we've delivered to support jobs and businesses.Liam Byrne, chief secretary to the Treasury, said: "Mr Osborne's hypocrisy beggars belief. The Tories have fought against every plan we've delivered to support jobs and businesses.
"We have already introduced the toughest bank remuneration policy in the world. We have stopped short of banning all bonuses for retail banks because it is unworkable, but we are presently negotiating with RBS and Lloyds on the payment of 2009 bonuses"."We have already introduced the toughest bank remuneration policy in the world. We have stopped short of banning all bonuses for retail banks because it is unworkable, but we are presently negotiating with RBS and Lloyds on the payment of 2009 bonuses".
Liberal Democrat Treasury spokesman Vince Cable said: "The Tories have been deeply ambivalent on the much more fundamental question of what we do about the future of the banking system.Liberal Democrat Treasury spokesman Vince Cable said: "The Tories have been deeply ambivalent on the much more fundamental question of what we do about the future of the banking system.
"They have not given full backing to [Bank of England governor] Mervyn King's proposals on splitting up the banks and these bonus proposals are short-term, stop-gap solutions designed to stem public anger but which fail to get to the heart of the problem.""They have not given full backing to [Bank of England governor] Mervyn King's proposals on splitting up the banks and these bonus proposals are short-term, stop-gap solutions designed to stem public anger but which fail to get to the heart of the problem."