Tories call for end to cash bonuses
In a speech to the City today, Shadow Chancellor George Osborne is expected to announce that retail banks should be stopped from paying cash bonuses of more than £2,000.
Many experts have been arguing that big bonuses prompted excessive risk-taking at banks which contributed to the financial crisis.
In his speech, Mr Osborne is expected to say lending banks should be rewarded with shares instead.
According to the Conservative party, this would result in £20 billion of new lending that would release credit for corporates and consumers. The Shadow Chancellor will say “emergency steps” are required in order “to support bank lending and move the economy forward”.
Last week, the Centre for Economics and Business Research said City bankers will receive an estimated £6 billion in bonuses for this year, compared with £4 billion for 2008.
The estimate comes despite public outrage against bonuses after a year of multi-billion pound bailouts within the banking sector.
However, Mr Osborne’s proposals were criticised by Liam Byrne, chief secretary to the Treasury, who said: “The Tories have fought against every plan we’ve delivered to support jobs and businesses. And if we withdraw support now, as Mr Osborne wants, the recession will be longer and deeper.
“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 Royal Bank of Scotland (RBS) and Lloyds Banking Group on the payment of 2009 bonuses,” added Mr Byrne.
Mr Osborne’s comments come just a week after US President, Barack Obama, announced he was proposing to cut the salaries of top executives at firms which have received billions of dollars in Government aid.
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