Banking: Bonuses

Lord Clinton-Davis Excerpts

Tuesday 11th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am always grateful to my noble friend Lord Oakeshott for reminding us of what is in the coalition agreement, which is always at the heart of what we do. I am sure that my colleagues in the Treasury will need absolutely no reminder of what the coalition agreement says in this area, because it is precisely because we are guided by the coalition agreement that we now have a package that, as I have explained, means that 2,500 banks as opposed to 25 are caught by the code. For all their talk, the previous Government had not actually brought in any new remuneration code. We now have one in place. We are continuing, as I said, to urge our European partners to work with us on a common set of banding disclosures. The current discussions are precisely to make sure that bonuses are lower than they would otherwise have been and that lending is higher.

In respect of the Royal Bank of Scotland, as I said in the Statement, we found ourselves having inherited a most extraordinary agreement negotiated by the previous Government that put absolutely no restrictions on RBS’s payments and bonuses this year. We want to see RBS now not as a front-runner, which seemed to be where it was encouraged to be under the previous Government’s agreement, but as a back-marker when it comes to its bonus payments for this year.

[Lord Clinton-Davis]

Does the noble Lord recall the words of Nick Clegg, who asked whether it did not make one angry that the banks were being allowed to ride roughshod over our economy and were still handing out bonuses by the bucketload? Is the Minister satisfied that that situation should continue and that he should issue sanctimonious and tired Statements to the House? Does he not feel ashamed of what is happening?

[Lord Sassoon]

My Lords, I am sorry if I will become tediously repetitive, but if the questions cover points that I thought I had made clearly, I will have to make them again. We are taking far more practical and effective action than the previous Government did. We have extended very considerably the scope and form of the disclosures on bonuses that must be made. As to the quantum, I repeat to the noble Lord, Lord Clinton-Davis, that discussions led by my right honourable friend the Chancellor are ongoing, with the intention of making sure that bonuses are lower than otherwise they would have been and that lending to British businesses is materially and verifiably higher than it would have been. That is what we want in the context also of a vibrant and healthy banking system, which is good not only for this country but for the UK's global competitiveness.