Erikka Askeland: Difficult to put a price on keeping top firms in UK

POLITICIANS. You can listen to them talk and be impressed by the sound and fury. But close parsing of their words often renders their rhetoric meaningless drivel.

Yesterday, Prime Minister Gordon Brown made himself the star of a "don't be afraid to re-elect Labour" show at the Saatchi Gallery, where he told an audience of global business leaders that "we will always support enterprise as the engine of economic growth". Well for goodness' sake. What else, other than enterprise, is the engine of economic growth anyhow?

The government's Global Investors Conference was designed to soothe jumpy nerves about doing business in Britain. Brown promised anyone who cared to set up shop in the UK a "low debt economy" in which to operate. Which initially sounds tempting, except surely what inward investors really want is a "low tax economy". And neither of these, thanks to a budget deficit stretching to 12.6 per cent of GDP, seems that likely.

Instead, Chancellor Alistair Darling launched his tax framework for multinationals which made noises about "competitiveness, fairness, simplicity, stability and certainty".

But considering Brown's nod to Victorian social thinker Ruskin in his speech noting the difference between words and deeds, Labour may be saying it but it certainly hasn't been doing it. Instead the party has on its hands the stain of populist and rather ill-thought-out tax grabs – including the most recent, the bankers tax and the top rate of tax for earners over 150,000.

Ill-thought-out because when the government unveiled the bank tax in the Pre-Budget Report, not even the Treasury could define what it meant by "bank" for the definition of tax purposes.

Fears that the headline-grabbing (and with any luck, vote-winning) taxes would drive those brilliant bankers and high net worth individuals from our shores has so far proved a bogeyman. But considering neither will net that much for the depleted UK coffers, it may yet pose a serious deterrent in boardrooms across the globe which could prove even more expensive if we lost them.

Or will it? Quite simply, low taxes are just not an option whether the UK is Labour or Tory. But recently Paul Polman, chief executive of Unilever, darkly hinted that tax and regulatory burdens might make them reconsider the UK as the group's headquarters. It seemed more an idle threat than a serious business plan. And it would be interesting to see if such a move would make UK consumers choke on their fair trade Ben & Jerry's Mystic Moo.

Graeme Leach, chief economist at the Institute of Directors, argues that "if other countries are cheaper, they win". If it were that simple, surely the UK would be losing out even more to Dubai and Ireland.

Bank chiefs tune into new way of making decisions

AND so the last poor, overworked and under-appreciated bank boss, Eric Daniels, has joined Stephen Hester, Bob Diamond and John Varley and waived his 2.3 million bonus. Such magnanimity in the face of massive losses – Lloyds is expected to be another 4 billion in the red when it announces its results this Friday – will play well to the masses. But surely I'm not the only one in thinking it is a sign of the necessary but still malign influence of government on the policy of the banks?

After the Royal Bank's Hester gave up his bonus on Sunday, Daniels had no choice but to follow suit.

But make no mistake: this is not penance, which is self-inflicted, but punishment aimed at mollifying public outrage. If it had been voluntary then an announcement about Daniels' bonus would have come out sooner rather than last.

Instead, both RBS and Lloyds carefully watched the signals and took the temperature before sacrificing their chief executives' bonuses to the bonfire. But the method of how government informs the banks of its intentions seems scary in its caprice. When asked on Sunday morning about Hester's bonus, RBS said there was nothing to report. But then Lord Mandelson went on TV to say Hester should give up his bonus – and lo and behold, a few hours later he did.

Hester pleaded early in his tenure as head of the UK taxpayer's biggest bank to let him run it as a bank without political interference, but Mandelson has an angry electorate to impress.

It used to be that banks made remuneration decisions based on several complex factors. Now it is at the whim of politicians' announcements on telly.