Labour is against businesses claims George Osborne
George Osborne has vowed to stop anti-business critics. Picture: Ian Rutherford
CHANCELLOR George Osborne has vowed to stop “anti-business” critics of the bonus culture who he believes could cost the UK jobs and prosperity.
In a week when some of the biggest bonuses for bank executives are expected to be announced, Mr Osborne used a speech to the Federation of Small Businesses (FSB) last night to defend the massive payments that have been widely condemned by his political opponents.
The Chancellor’s comments came as Labour sought to keep up the pressure on David Cameron over “excessive” City pay, using a House of Commons. RBS is 84 per cent owned by the taxpayer. This week, pressure from Labour also persuaded Network Rail chief executive Sir David Higgins to pass on his £340,000 bonus.
However, it is thought that the political pressure will not affect banks and other businesses in the private sector.
Barclays chief executive Bob Diamond is expected to receive up to £10m, while it is believed that a similar sum will go to HSBC boss Stuart Gulliver.
But Lloyds Banking Group chief executive Antonio Horta-Osorio, whose bank is 41 per cent owned by the taxpayer, has said he will not take up his bonus – thought to have been worth about £2.4m – after taking time off due to poor health.
As Labour yesterday held an opposition day debate on introducing a “bonus tax”, Mr Osborne went on the attack, warning that Labour and other critics of bonuses “are trying to create an anti-business culture in Britain”, which has to be stopped.
He said: “Of course we need to reform our banking system … Of course rewards for failure are unacceptable, and those who believe in the free market are the first to say so. But a strong, free market economy must be built on rewards for success.
“There are those who are trying to create an anti-business culture in Britain and we have to stop them. At stake are not pay packages for a few, but jobs and prosperity for the many.”
He spoke after Labour called for a clampdown on “excessive” City bonuses at a time when ordinary people were facing the “biggest squeeze on their living standards in a generation”.
Shadow business secretary Chuka Umunna demanded change, saying that the current culture saw bankers “right at the centre of the crisis” continue to receive “very high remuneration” while many people struggled for jobs in a slow-growing economy and profitable businesses were struggling to access financing or had gone under.
Mr Umunna challenged the notion that attacking the status quo was “anti-business”. He said: “This is an utterly absurd notion, given that among the most vociferous critics of our banks are the small and medium-sized businesses who make up the overwhelming majority of businesses in this country.”
Labour’s motion said the party believes that bank executive remuneration should be related to performance and that banks either directly or indirectly supported by the taxpayer must recognise that the taxpayer expects very large bonuses only to be paid to “reflect genuine exceptional performance”.
It also urged the government to consider repeating the bankers’ bonus tax, in addition to the bank levy, to pay for 100,000 jobs for young people. And it called on the government to increase transparency, accountability and responsibility in the setting of pay in the sector.
Labour’s motion was defeated by 244 votes to 295.
Conservative Treasury minister Mark Hoban called on the banking industry to show “leadership” in the up-coming bonus round. But he went on: “Across the board there is a consensus that we need to tackle excessive pay. It is this government that is answering that now.”
He said: “We are remedying what the Chancellor has described as ‘the biggest failure of economic management and banking regulation in our country’s history’. That failure was presided over by the party opposite.”
City bonuses tripled under Labour to £11.6 billion, but fell to £6.7bn last year and are expected to drop this year, said Mr Hoban.
He added: “Under the previous government, bonuses became a right, not a reward.
“After 13 years of a Labour government, we have a substantial challenge to dismantle the culture of excessive pay in the banking sector.”
Labour MP Adrian Bailey, chairman of the Commons business, innovation and skills select committee, said resentment was building up among low- and middle-income voters that they were being made to pay for the bank bailouts while those responsible appeared to still reap the rewards of high pay.
Mr Bailey said: “It not only offends a great sense of injustice in the country, but is arguably both socially and economically dysfunctional.”
David Hillman, spokesman for the Robin Hood Tax campaign, which is pushing for a financial transaction tax, said: “It is high time the government moved beyond rhetoric.
“It will take more than warm words in the Commons to ensure banks pay to repair the damage done to our economy and society.”
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Comments
There are 14 comments to this article
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ljstewart
Wednesday, February 8, 2012 at 12:37 PMThis is not anti-business, it is anti-failure. There should be NO BONUSES for failure, incompetence and general bad management. The vast majority of us would be sacked for the incompetence and sheer bloody minded greed of the minority.
Taibhsearachd
Wednesday, February 8, 2012 at 12:19 PMMany business managers think that they work harder than anyone else. No. Many medical & paramedical staff, scientists, and people running their own small businesses work extreme hours, some for peanuts. Many business managers think that they bear greater responsibilities than anyone else. No. Bus & taxi drivers, pilots, train drivers, medical & paramedical staff, engineers of many types, industrial safety officers and others have life-critical jobs. Many business managers think that they bear greater risks than anyone else. No. Fishermen, miners, defence force personnel, radiation workers, social workers, and many others are exposed to much greater risk of death & injury. Many business managers think that their jobs are more difficult than those of anyone else. No. Professionals of many callings have to understand advanced mathematics & statistics, andor digest & remember a deluge of info. Many sit extraordinarily difficult professional exams, only passed by a minority. Many business managers think that they are irreplaceable, and deserve massive rewards to retain their services. No. The greatest single cause of business failure & success is the business cycle. Much of business management is pedestrian: people know which steps to take when, to exploit current market conditions. Only a tiny number of businesses truly thrive against the odds thanks to exceptional management decisions. Yet almost all corporate bosses receive egregious payments, simply because they are corporate bosses. George Osborne is a clown if he imagines that business managers deserve annual payments that are 40-100 times the average pay of their employees. George Osborne is a clown if he thinks that such payments do not lead to industrial unrest, especially in a downturn. ENOUGH IS ENOUGH. The extreme hubris & pay of top noddies must end, NOW!
Blantyre Bill
Wednesday, February 8, 2012 at 11:04 AMMost people would agree that the excessive bonuses being paid to those on an already high salary have got out of control. That doesn't mean that most people are against business. The current trend in politics to denigrate anybody who disagrees with you is infortunate.
well informed
Wednesday, February 8, 2012 at 09:26 AM8 Liebour are not disenfranchised from big business but small businesses! They like the tories favour big businesses over the Entreprenuer and folk working their ar*eses off to keep their heads above the water line! Our entire political system is now geared towards corporate benefit over social need!
well informed
Wednesday, February 8, 2012 at 09:24 AMLiebours anti business stance has been obvious since they brought in IR35!
The Harder They Come
Wednesday, February 8, 2012 at 08:29 AMLabour can be expect to be roughly mounted if they continue supporting the 'no more powers' fundamentalist unionism of the tories.
Family guy
Wednesday, February 8, 2012 at 07:32 AMDon't need to be a genius to understand that Labours disenfranchisement witth big business stems from the flow of donations from big business to party coffers has slowed to a trickle because at present, Osbourne is the one needing woo-ed by them in order to get the tax breaks. That is how Westminster has worked for quite sometime.
The Harder They Come
Wednesday, February 8, 2012 at 07:19 AMGrahamski stands shoulder to shoulder 100% with Osbourne.
ELDee
Wednesday, February 8, 2012 at 04:33 AMI do have concerns over labours relationship with business, however it was Labour that recruited these CEOs for banks and would have been involved with their contracts, including bonuses. Labour now has the cheek to try and suppress the bonuses they approved when the incumbent CEOs were recruited. I support bonuses, but only if the individual and business targets are met, but this is usually tied up with HR, lawyers and the person themselves. If a newly recruited CEO is given a poisoned chalice of a job, and makes a good effort to turn the situation around, then they should also recive a bonus.
allymax
Wednesday, February 8, 2012 at 03:42 AMLabour ..........is.......................................................'anti-business' ? -------------------------------------- According to George (slippery) Osborne anyway !
Jimmy Fae the West
Wednesday, February 8, 2012 at 02:49 AMComments permitted on this British pss but no comments allowed on Megrahi appeals????? It is more than the BBC who are guilty of attempting to control the news.
Handsome Scotsman
Wednesday, February 8, 2012 at 02:33 AMI wonder where we'd be if Gordon actually won the election. A scary place too dark to comprehend.
Kinghob
Wednesday, February 8, 2012 at 01:09 AMHow about "Labour's against 'everything' because they are led by vacuous idiots who have no ideas"?
bassrock
Wednesday, February 8, 2012 at 12:25 AMThat needs rephrased "Labour don't like my friends". That's more accurate..
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