Jo has called on the Chancellor to restrict bank bonuses and understand public anger about their scale.
During a recent debate in Parliament, Jo asked the Chancellor to ensure that bonuses are reduced and only awarded to reward the long-term sustainable performance of banks.
The Government is currently in discussion with the banks as to a settlement on the level of bonuses this year, and has introduced a permanent banking levy on bonuses which will raise £2.5bn a year.
In his reply, Chancellor George Osborne assured Jo that the Coalition will end the culture of recklessness and guaranteed bonuses amongst banks, placing importance instead on smaller bonuses, greater transparency, and contributions to local and regional economies.
“The Chancellor must reach a new settlement with the banks that prevents bonuses from hitting levels under the previous government. Banks must show sensitivity and transparency in the way they reward their employees, especially when many people are struggling in this tough economic climate.
“The Coalition Government is reforming the banking system to make it healthier again, but there is still a way to go in ensuring that public faith in the financial sector is restored.”
Commenting, Jo said:
Notes to Editors
1. The full text of Jo’s question and the Chancellor’s reply is as follows:
11 Jan 2011 : Column 158
Jo Swinson (East Dunbartonshire) (LD): The Chancellor must understand the level of public anger about huge bank bonuses and recognise that obscene rewards for short-term gain without regard to the long-term consequences were part of the problem that led to the banking collapse in the first place. Surely it is to avoid a repeat of that that bank bonuses should be restrained and, importantly, weighted towards sustainable long-term performance, rather than short-term speculation.
Mr Osborne: I agree with all of that. We want to see bonus restraint; we want to see bonuses lower this year -[Interruption.] Lower this year than they were under the Labour Government. That is one objective. Secondly, we want to see bonuses deferred. Thirdly, we want to make sure that they do not reward risk-taking that goes badly wrong-that is why we want the ability to claw back. We also want to get away from the system-again, this thrived under the previous Government-of guaranteed bonuses, which people got regardless of what happened to their financial institution. That is precisely what the code of practice addresses, it is precisely why we are looking at greater transparency and greater shareholder involvement, and it is precisely why I want this new settlement with the banks.