Finance (No.2) Bill

I am not making any particular proposals at this point; I am simply saying in new clause 3 that we should review the level of tax that banks are paying. There may be perfectly good and justified reasons for it, but we are talking about enormous sums of money. If, as some allege, the banks are playing a canny game, with sums of money that might have prevented many of the swingeing cuts that we are seeing to public services, it is incumbent on us, on behalf of our constituents, to ask those questions. If we are indeed ““all in it together””, as we are constantly told, we should ensure that the banks pay their fair share and do not leave the rest of us picking up all the bills. Banker bonus season is around the corner. It seems rather than showing restraint, the bankers may be showing a return to form. Last week, Deutsche bank reported its third quarter results, saying that it had set aside £4 billion in the bonus pool for its corporate and investment bank over the first nine months, amounting to around €285,000 per employee. According to the financial services recruitment firm Astbury Marsden, banks and hedge funds are stepping up their bonus buy-out offers, as they try to prise key staff from their competitors. Goldman Sachs, a Wall street bank with a large British operation, has managed to set aside around £236,000 per employee in compensation for the first nine months of the year, which is obviously less than the $527,000 that we saw this time last year, although it still demonstrates that potential pay-outs are being lined up in the City for February, when they are traditionally handed out. Richard Lambert, the outgoing director general of the CBI, has called for a global ceasefire between banks, to stop bonuses spiralling upwards, thereby further undermining the public's trust. In his speech to the CBI's annual conference this month, he said:"““Carrying on with business as normal would seem arrogant and out of touch,””" pointing out that many workers were facing job cuts and pay freezes. Those comments came as a survey found that seven out of 10 bankers expected to take home more pay this year, with half expecting a bigger bonus than last year, according to the website eFinancialCareers. City head-hunters Morgan McKinley found that 48% of financiers are expecting a higher bonus. The Centre for Economics and Business Research has predicted that £7 billion is likely to be paid out this year. The former Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), wisely instituted a bank payroll tax on banker bonuses while Labour was still in charge, netting some £2.5 billion for the Exchequer. Yet despite the coalition agreement promising to"““bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector,””" nothing significant has yet materialised from the Government. In fact, worse, the Government now appear to be rowing back from their commitments to tackle excessive banker bonuses. Last Monday, the Treasury Minister in the House of Lords, Lord Sassoon, told peers that"““the Government have taken action to tackle unacceptable bonuses in the banking sector,””" although it was not quite clear what that action was. He continued:"““The Financial Services Authority is updating the remuneration code, which will ensure that bonuses are deferred and aligned with the underlying risks, and significant portions of any bonus will be paid in shares or other securities,””" which was not something that originated with the Conservatives. He went on:"““Employees in this industry will no longer receive all their bonuses in cash while leaving their shareholders, and potentially the taxpayer, exposed to the long-term consequences of the risks they take.””" When asked by my noble Friend Lord Myners whether that meant that future bonuses would be ““deemed to be acceptable””, Lord Sassoon merely reiterated his earlier remark, saying:"““My Lords, what I said was that we have indeed taken action””.—[Official Report, House of Lords, 1 November 2010; Vol. 721, c. 1417-18.]"