Labour backs bankers’ bonus cap

Labour Euro MP, Arlene McCarthy

At the European Parliament’s plenary session in Strasbourg Euro MPs voted through a new package of rules that will make banks safer, more accountable and help them to focus on their essential role of lending to the real economy.

Labour Euro MP, Arlene McCarthy, Vice President of the Economic and Monetary Affairs Committee and Labour's Economic Affairs spokesperson in the European Parliament, who was responsible for rules on bankers’ bonuses agreed in 2010 said: “In 2010 the EU put in place rules ensuring bonuses were deferred, could be clawed back and that cash bonuses were limited. The banks were told to introduce a ratio between fixed salary and bonus elements. The banks failure to put their own house in order has resulted in these tough new rules”

“It is the failure of banks to self regulate on bonuses or to exercise restraint that has now resulted in a bonus cap with a 1:1 or 1:2, if agreed by shareholders, salary to bonus ratio which aims to put an end to the excessive risk culture which lead to taxpayer bail-outs and bank collapses.”

“These rules will put an end to an unsustainable banking model where the UK bank RBS which is 84% taxpayer owned, while suffering £5.2 billion losses, £1.1 billion fines for mis-selling for payment protection insurance and £390 million fines for Libor-fixing, were still paying over £600 million in bonuses. This is neither ethical nor sustainable.”

Arlene said: “This is a Government that is happy to cap public sector pay in times of austerity but reject a cap on bankers pay. These new rules will still allow a trader earning £236,000 to take home a total annual salary of two times their basic pay of £708,000. Whilst Government cuts mean that an estimated additional 230,000 people in my region, the North West, will have to access food banks in 2013.”

“Tories yet again failed to support reform in bankers’ bonuses, demonstrating that they continue to stand up for, and defend, pay and salaries of 1% while the 99% of ordinary working people pay the price for banks excessive risk taking.”

“A recent poll found that 76% of people supported a cap on bankers’ bonuses. The UK Government is yet again isolated and out of touch. It is Labour Euro MPs who are delivering a more responsible sector and bonus reform in line with the public demand for restraint.”