Bank Bonuses

Jo Swinson Excerpts

Tuesday 11th January 2011 Commons Chamber

[Mr Osborne]

It is precisely the real-world situation—where businesses need more lending, communities need support and we need more investment in our regional economies—that I am seeking to address. As the hon. Gentleman well knows, as a Member from Scotland, we need a successful, properly regulated financial services sector that employs tens of thousands of people in Scotland and, indeed, hundreds of thousands of people across the United Kingdom. That is what we are seeking to agree with the banking system. The fantasy world is the one that the Labour party occupies, where it bears no responsibility for the mess in which it has left this country.

[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.