Osborne ‘must tackle bank pay’

Chancellor George Osborne has been urged to act to tackle bankers’ bonuses and the “massive inequality” in pay in the financial sector.

The plea came from MSPs on Holyrood’s economy committee, as they claimed a major report had missed the opportunity to “tackle the real issue” in the industry: the “need to restore trust between the public and the banking sector”.

Members of the committee have written to Mr Osborne in the wake of the publication of the Independent Commission on Banking’s (ICB) report.

The ICB last month called for Britain’s banks to ringfence their high street and investment divisions to “make it easier and less costly to resolve banks that get into trouble”, and without taxpayers’ help.

It also urged the UK government to ensure Lloyds Banking Group’s planned sale of 632 branches led to a “strong challenger bank”.

However, MSPs on the committee branded the report a “missed opportunity” in some areas, stating they were “disappointed” there were no specific proposals aimed at increasing competition in the banking sector in Scotland.

In the letter to Mr Osborne, deputy committee convener John Wilson also said: “The financial sector is of great importance to the Scottish economy and the committee feels an opportunity has been missed by the ICB to tackle the real issue: the need to restore trust between the public and the banking sector.”

He argued that the “substantial stake” the UK taxpayer had in both Royal Bank of Scotland and Lloyds Banking Group gave the Westminster government an opportunity to tackle the “massive inequality of pay in the banking sector, with the continuation of large remuneration and bonus packages for those at the very top which do not appear to be based on share performance”.

He said the committee had “serious concerns” that the ICB had failed to make any recommendations on pay.