UNITED KINGDOM: Launching fresh attacks on bankers' bonuses, Britain's opposition leader Ed Miliband tells the financial sector that banks face isolation if they don't change

Record ID: 566443

  • Title: UNITED KINGDOM: Launching fresh attacks on bankers' bonuses, Britain's opposition leader Ed Miliband tells the financial sector that banks face isolation if they don't change
  • Date: 4th February 2012
  • Summary: LONDON, ENGLAND, UK (FEBRUARY 3, 2012) (REUTERS) MILIBAND SPEAKING ON PODIUM AUDIENCE LISTENING MILIBAND THANKS AUDIENCE AT END OF SPEECH AUDIENCE APPLAUDING
  • Embargoed: 19th February 2012 12:00
  • Keywords:
  • Location: United Kingdom, United Kingdom
  • Country: United Kingdom
  • Topics: Finance,Politics
  • Reuters ID: LVA6B9TVBHJB8FG8FJJ8K1BX3NWQ
  • Story Text: British opposition leader Ed Miliband stepped up his attacks on extravagant bankers' bonuses on Friday (February 3), saying banks face intense public anger and isolation unless they change their ways.
    In a speech on "The future for banking" hosted by Thomson Reuters, the leader of the centre-left Labour Party called for an end to a "culture of excessive bonuses".
    "People who did not cause the financial crisis are paying the price. Too many of those who did cause the financial crisis are not," Miliband said.
    Miliband's broadside shows bankers can expect no let-up in criticism of the rewards enjoyed by an industry whose problems since 2008 brought the British economy to its knees.
    He will also announce that the Labour Party will seek a vote in parliament on Tuesday on imposing a new tax on bankers' bonuses, although it stands little chance of success.
    Britain stripped the former head of Royal Bank of Scotland of his knighthood on Tuesday. Fred Goodwin had become a target of public fury in Britain for his role in the 2008 crash, which led to the government spending 45 billion pounds ($71 billion) to bail out his bank.
    Two days earlier, Goodwin's successor at RBS, Stephen Hester, said he would turn down a million pound share bonus that had drawn scorn from all of Britain's major political parties.
    Miliband will urge the banking sector to recognise it has reached a crossroads and that "continuing on its current path will lead to further isolation from society, greater public anger - and an economy which does not pay its way in the world."
    "This is a call on banking to recognise that it should take the path of change," he said.
    He will also urge banks to lend more to small businesses that have found it hard to get credit during the downturn.
    Criticising banks may be popular with voters, who are bearing the brunt of austerity measures the government has imposed to rein in a big budget deficit. But there are fears growing hostility could turn into a witch-hunt that could damage a sector that remains vital to Britain's economy.
    Prime Minister David Cameron has rejected Labour criticism of his coalition government over the issue, saying Labour, in power for 13 years until 2010, "presided over the biggest banking and financial disaster in our history" and allowed huge bonuses to be paid.
    Miliband said Labour would give members of parliament (MPs) a chance to vote on Tuesday on a new bank bonus tax whose proceeds would help 100,000 unemployed young people into work.
    This is a long-standing proposal from Labour which has said its proposals to tax banks would raise about 2 billion pounds.
    "We will also ask MPs to vote on ending a bonus culture based on one-way bets rather than genuine reward for risk," Miliband said.
    Labour has secured a parliamentary debate next Tuesday on "responsibility and reform for British banks", but supporters of the Conservative-led coalition are expected to defeat Labour's motion on a new tax.
    After winning the 2010 election, the coalition replaced Labour's tax on bankers' bonuses with a bank levy.
    Labour sees scope to extract political points from bankers' unpopularity with the public. The party is running virtually neck-and-neck in the polls with the centre-right Conservatives, even though the economy is shrinking, unemployment is rising and budget cuts are hurting. The next election is due in 2015.
    Miliband repeated a call on Friday for the government to force banks to reveal how many employees are earning more than one million pounds and a proposal for companies to put ordinary employees on committees setting top executives' pay.
    Cameron has rejected the pay committee proposal and has said the first proposal would have to be implemented Europe-wide.

    (ends)
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