Oral Answers to Questions

Peter Tapsell Excerpts

Tuesday 8th February 2011 Commons Chamber

[Mr Hoban]

I will take no lessons from the Labour party on bank bonuses. The shadow Chancellor presided at the Treasury when big bonuses were being paid out in cash, with no clawback and no lock-up. He backed that light-touch regime in government. We have taken the tough decisions on tackling bonuses. The Opposition should be apologising, not criticising.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

Do Treasury Ministers agree that the real problem with bankers’ bonuses is that they are paid not out of profits, but out of revenues? Taxing banks after the bonuses have been paid merely depresses dividends, particularly for pension funds. Why are bankers’ bonuses not paid out of profits, as they always were by my very efficient stockbroking firm?

[Mr Hoban]

My hon. Friend makes an important point. Of course, under the old regime, there was no clawback when bonuses were paid out in cash, and no lock-up. The new code on remuneration introduced by the Financial Services Authority, which is ahead of international practice, has clear rules on deferral, requires that bonuses be clawed back for poor performance, and requires that bonuses for significantly highly paid members of staff—those who take risks—be paid out principally in shares, not in cash. That will ensure that the interests of bankers are aligned with those of shareholders.