Bankers’ Bonuses and the Banking Industry

Susan Elan Jones Excerpts

Wednesday 25th February 2015 Commons Chamber

[Cathy Jamieson]

I do not think that anyone is suggesting that we want irresponsible lending. We want those businesses that are valuable, sustainable and want to grow—I am sure that the hon. Gentleman has heard from them in his constituency, as I have in mine—to be able to access finance. That is the important point.

[Susan Elan Jones (Clwyd South) (Lab)]

My hon. Friend is being incredibly generous in giving way to Conservative Members, and I would like to quote another Conservative, albeit not a Member of this House. Kay Swinburne, an MEP for Wales, had this to say on the subject of the court case in Europe that the Government decided to contest with our money:

“I can tell you there is not a single constituent I have met that actually thinks we were right to have taken that to the courts”.

She then suggested that bankers could be “a little more innovative” in getting around the cap. That is the real voice of the Conservative party, even if Conservative Members are not expressing it here today.

[Cathy Jamieson]

I was planning to say something about the cap later, but my hon. Friend has made her point with words that I would have difficulty bettering.

Let me return to banks paying lavish bonuses. The public are understandably still questioning why, with wage stagnation and the cost of living crisis that they are all facing, senior bankers have continued to reward themselves in that way. Let us look at the figures. Last year, bonuses at Barclays were up 10% to £2.4 billion and those at Lloyds were up 8% to £395 million. The Royal Bank of Scotland, 79% of which is owned by the taxpayer, announced a bonus pool of £577 million. Some may say that that is all well and good, because it is just senior bankers enjoying the hard-earned fruits of their labour, but that is more difficult to justify in the light of recent scandals and given that two of the UK’s four largest banks—Barclays and RBS—have experienced drastic falls in profits. Earlier this week, with impeccable timing, of course, HSBC announced its bonus pool for the year, awarding its chief executive, Stuart Gulliver, £7.6 million—I repeat, £7.6 million—and paying 330 of its top employees in excess of €1 million, despite the revelations of recent weeks and a 17% fall in profits.

It would be remiss of me not to refer to the role that the Government have played in all this. As well as the failure of their schemes to galvanise lending, they have failed—this point was made my hon. Friend the Member for Denton and Reddish—to implement all the reforms recommended by the Independent Commission on Banking and the Parliamentary Commission on Banking Standards. They ignored Labour’s pleas for action to regulate benchmarks when the LIBOR scandal first came to light, and they have actively aided and abetted bankers’ efforts to safeguard their bonuses. As my hon. Friend the Member for Clwyd South (Susan Elan Jones) pointed out, the Chancellor launched an ill-fated and misguided legal challenge to the EU bonus cap, which limits bonuses to 100% of fixed pay or 200% with shareholder approval, which still seems fairly generous.