The shadow chancellor has just made one of the most stupid speeches of the year, against some pretty stiff competititon. He says that high street banks should limit their cash bonuses to £2,000 per employee. The suggestion is daft for a number of reasons.
1. It seems rarely understood by the Left (although one might have thought a Tory would grasp it) that shareholders are themselves capitalists and stick to as much of their own money as they can, as capitalists do. They pay what is needed to keep staff; they don't accept lower dividends so everyone can have champagne.
2. Now the Government is a shareholder, it too must pay staff what is needed to keep them (it will be a bit less this year because there aren't so many jobs for them to go to). If you don't pay them you risk losing them.
3. This sort of state interference in a nationalised industry is what Tories should be condemning, not promoting.
4. If the banks lose their best staff they will be worth less when the Government finally sells them off, meanng a loss for the taxpayer.
5. Osborne's wizard wheeze is that the staff will be paid bonuses in the banks' shares. No objection to this, except for the fact that they cannot cash them in for several years so they are seen as tying the employee to the bank. The best ones can get jobs without this restriction. The worst ones will stay.
6. Osborne says this will free up £10bn of bank lending. It won't (increased capital ratio proposals, which Osborne ahs not objected to, will swallow up most of it), and even if it did, that would be such a trivial amount as to be unnoticeable.
Perhaps Osborne is hoping to look like the People's Chancellor and that we'll forget the detail of his speech. My view is that this is an issue on which he would have done better to keep silent.
1. It seems rarely understood by the Left (although one might have thought a Tory would grasp it) that shareholders are themselves capitalists and stick to as much of their own money as they can, as capitalists do. They pay what is needed to keep staff; they don't accept lower dividends so everyone can have champagne.
2. Now the Government is a shareholder, it too must pay staff what is needed to keep them (it will be a bit less this year because there aren't so many jobs for them to go to). If you don't pay them you risk losing them.
3. This sort of state interference in a nationalised industry is what Tories should be condemning, not promoting.
4. If the banks lose their best staff they will be worth less when the Government finally sells them off, meanng a loss for the taxpayer.
5. Osborne's wizard wheeze is that the staff will be paid bonuses in the banks' shares. No objection to this, except for the fact that they cannot cash them in for several years so they are seen as tying the employee to the bank. The best ones can get jobs without this restriction. The worst ones will stay.
6. Osborne says this will free up £10bn of bank lending. It won't (increased capital ratio proposals, which Osborne ahs not objected to, will swallow up most of it), and even if it did, that would be such a trivial amount as to be unnoticeable.
Perhaps Osborne is hoping to look like the People's Chancellor and that we'll forget the detail of his speech. My view is that this is an issue on which he would have done better to keep silent.
