The party is not exactly short of opponents to overcome when it comes to implementing Liberal Democrat beliefs in government, yet we are not using the party’s grassroots strengths to help win those struggles.
The Conservative Party is, to take one example, split on civil liberties. Many key figures take a similar view to the Liberal Democrats, yet there are also many opponents of what a Liberal Democrat majority government would
Cracking down on bankers’ bonuses is a “moment of truth” for the coalition government, a leading Liberal Democrat has warned, amid mounting expectations that payments of at least £7bn will be awarded in the coming weeks…
Lord Oakeshott, a Liberal Democrat treasury spokesman, said this was a moment for the coalition to act, particularly on forcing more disclosure from banks on the amount they pay.
“This is the coalition’s moment of truth on fairness,” he said. “The first item on our coalition agreement is a promise to deal with unacceptable bankers’ bonuses. Secret bonuses are by definition unacceptable, so
It’s January, so the government’s bank levy has come into force. The basic details are that it is a o.05 per cent levy on bank balance sheets, but rises to 0.075 per cent in 2012 and the details of how it works are designed to encourage banks to rely more heavily on more stable sources of funding in the future.
Expected to bring in £2.5 billion a year, the revenue is pretty small compared to the estimated costs of the financial crisis overall (even if future sales of the government’s bank shareholdings are factored in). However, at a time when …
If there is one issue where destiny seems be demanding the Liberal Democrats to be bold, it is the issue of Britain’s dysfunctional banking system. Ninety per cent of the banking industry goes through the Big Six in the UK, some of which are not actually UK banks at all – and, in those circumstances, it is hardly surprising that they don’t do the job that needs doing. Funding local enterprise.
A fortnight or so ago, things were looking quite bleak, at least for the coalition’s will to act. George Osborne had indicated that he wasn’t going to force the banks to be transparent …
Here’s your starter for ten in our Saturday slot where we throw up an idea or thought for debate…
Bonus for bankers are in the news once again, with talks involving the banks not yet reaching any agreement and with Deputy Prime Minister Nick Clegg keeping up the political pressure, telling the Financial Times:
“The banks should not be under any illusion this government cannot stand idly by. It is wholly untenable to have millions of people making sacrifices in their living standards, only to see the banks getting away scot-free…”
Mr Clegg, the son of a banker, said that he wanted
Earlier today Vince Cable gave a pugnacious speech, bashing bankers to use the tabloids’ favourite phrase, but doing so in the name of industry:
I can see Richard covering his eyes and groaning, alarmed that I may be about to embark on a round of “banker bashing”. What I can tell him is that businesses – including a lot of CBI members – keep telling me that I am not bashing them enough.
Of course, there is no point in engaging in a sterile public exchange of insults. But no one listening to the Chancellor’s statement last week will be under any
Conventional wisdom says that the deficit is all the fault of dodgy lending by the banks. But is it? If there had been no financial crisis, just a correction at the end of a credit bubble, would the deficit have disappeared?
The recession has certainly caused a temporary deficit. We’ve seen a reduction in GDP of about six per cent, and unemployment up to two and a half million. The temporary effects of the recession, a higher spending on benefits and reduced tax revenue, account for around £50bn of the deficit. But this will disappear as the economy recovers.
RBS is the latest British bank to return to profit, with the 84% state-owned bank reporting a first-half pre-tax profit of £1.14bn yesterday. This prompted Co-Chair of the Liberal Democrat Treasury Policy Committee, Stephen Williams, to make call for RBS to make greater efforts to assist UK firms:
RBS is almost entirely owned by the taxpayer, so these huge profits must be used for the national interest and not just to pay massive bonuses to senior staff. There is no excuse for RBS not to loan to good British companies that are struggling to get credit. We cannot simply allow
If you missed LDV’s coverage of Nick Clegg’s plans to bring the bankers’ bonus culture under control this morning, then why not catch up with the BBC coverage of the announcment:
A lot of people don’t enjoy election campaigns – but here’s one reason I do: the quality of Lib Dem press releases sky rockets. Today’s announcing Liberal Democrats’ five point plan to tackle bankers’ bonuses is a case in point: punchy but detailed. So good, in fact, I’m simply going to hit the copy ‘n’ paste key …
Background
The UK banks owe their very existence to the British taxpayer. Some banks such as RBS, Lloyds-HBOS and Northern Rock have received direct taxpayer bailouts, yet all have benefited from the explicit guarantee that none of them will be allowed to
Lib Dem shadow chancellor, Vince Cable tonight addressed Reform Scotland on the action that needs to be taken to reform banking and protect the economic recovery. LDV is publishing extracts from Vince’s speech, below, including his call to SNP leader and Scotland’s First Minister Alex Salmond to follow the Lib Dems’ lead and state clearly how the Scottish government will live within its budget in the years ahead:
Banking
We need to rethink our approach to banking. Successive Labour and Conservative Governments have left Britain vulnerable to an over-inflated financial services sector, where institutions became too big to fail.
On a UK level – where British banks are 4.5 times bigger in terms of their liabilities than the country’s economy – this is bad enough. But in Scotland, this has been still more pronounced. At the time they got into trouble, RBS’ and HBOS’ liabilities were 25 times the size of Scotland’s economy.
By Stephen Tall
| Thu 25th February 2010 - 7:00 pm
Bonuses for bankers: can they be justified? That’s the question everyone’s asking following RBS’s announcement that it made eye-watering losses of £3.6bn, but paid out bonues to staff worth £1.3bn.
Lib Dem deputy leader Vince Cable is dubious:
It’s hard to understand why £1.3bn is being paid out in bonuses when RBS continues to make losses. RBS rewarding individual bankers is like a football team paying their striker for scoring when they’ve just been relegated.
“While it is good news that RBS is meeting its mortgage lending target, its lending to business has fallen. The Government has to get a grip and
Vince Cable has today set out the Lib Dems’ plan for the banking sector. We’re publishing his speech in full below, but for those who just want the skinny, Vince:
Confirmed that the Liberal Democrats are not anti bank or anti banker.
Stated that his day one, hour one objective as Chancellor would be to devise a fresh and consistent mandate for the nationalised and semi nationalised banks.
Argued that RBS and Lloyds are key to supporting the British economy and are currently falling well short of their lending agreements.
Challenged Alistair Darling to give a full public account of these agreements on their respective anniversaries.
Reiterated the Liberal Democrat commitment to splitting up the banks, unilaterally if necessary.
Argued that so long as Northern Rock was re-mutualised in such a way to guarantee that it would continue to repay the Government, there is no reason – at least in principle – why it could not do so as a Building Society.
The Tories’ shadow chancellor George Osborne was proud to declare on this morning’s BBC Radio 4 Today Programme that he had been in favour of banking reforms now being championed by President Obama – to break up the big banks – “since last July”. This will come as something of a surprise to anyone who’s been following Tory policy on the banking industry over the past six months.
In fact, let’s take a look at what the Tories were saying last July, the month the party launched its white paper on financial regulation. Mr Osborne put forward six policy …
US firm Kraft’s proposed takeover of Cadbury’s has made headlines in recent days. First, because it’s a major, historic British brand being snapped-up by a non-UK business (or ‘foreign predator’, as Vince Cable labels them). Secondly, because of the fear that job losses will result. And, thirdly, because of the role of the Royal Bank of Scotland – in which the British government has a majority stake-holding – in lending the money to Kraft which will fund its acquisition of Cadbury’s.
The Lib Dems – in the shape of Nick Clegg and Vince – have sharply questioned the role of the Government in the takeover. At Prime Minister’s Questions yesterday, Nick asked Gordon Brown:
… there is a simple principle at stake. Tens of thousands of British companies are crying out for that money to protect jobs, and instead RBS wants to lend it to a multinational with a record of cutting jobs. When British taxpayers bailed out the banks, they would never have believed that their money would be used to put British people out of work. Is that not just plain wrong?
Lib Dem shadow home secretary Chris Huhne has an article in today’s Times noting that how much it costs the Treasury to borrow money depends on three ratings agencies … and asks the crucial question: are they fit to wield this power?
Chris’s credential for writing an article outside his brief? Well, he founded the sovereign group at Fitch Ratings, and was group managing director. Here’s an excerpt:
Last week Moody’s — one of the big three international ratings agencies — warned that the UK’s top bond rating would be under threat if Britain failed to sort out its public finances
Here’s the video response Lib Dem shadow chancellor Vince Cable recorded yesterday in response to Alistair Darling’s Pre-Budget Report yesterday. (It is him, promise: you can make out the outline of his hat in the evening gloom – it might be worth filming Vince nearer a street-lamp next time.)
This week sees the Government reveal its Pre-Budget Report, usually a review of spending in advance of the budget where the Chancellor says how he’ll be paying for it all though, traditionally, the run-up to a general election is the time for the Chancellor to play Santa, showering presents on favoured voters in key marginals, and with all the indications now pointing to a March General election, chances are we’ll never quite get to Hard Labour facing the BILL.
This year, of course, there is considerably less room for LARGESS. So let’s start with a look at where we’re …
Over at the Mail, Lib Dem shadow chancellor Vince Cable previews this week’s pre-budget report, says what the Lib Dems’ priorities would be, and and argues that the banks should pay back the taxpayer for saving their business. Here’s an excerpt:
This week the spotlight switches from bankers’ bonuses to government deficit. The collapse of the banks and the recession has devastated public finances. In Wednesday’s Pre-Budget Report, taxpayers will get the bill and the debate will begin as to who pays and how and when. … Unless painful budget measures accompany a fairer tax system, the public will be very angry. … There has to be a clear plan to bring the finances back into good order. Otherwise, there is a serious risk of a collapse of confidence leading to much higher interest rates and a weaker economy for a long time. It will not occur this side of an Election. …
I guarantee, on my party’s behalf, that we are prepared to take unpopular decisions – albeit with a commitment to distribute the burden fairly.
Timing is very tricky. Rushing into painful cuts or tax rises will plunge the country back into recession. … The Liberal Democrats and I have already indicated some of the programmes that could go: ‘baby bonds’, tax credit for high earners and identity cards. There will be defence cuts, providing these don’t affect the kit for our soldiers in Afghanistan; the Trident missile system is one item for the long term. Unless politicians spell out priorities, we shall get indiscriminate, damaging cuts to valuable services. …
Taxes should be cut for those on low and middle incomes by lifting the income tax threshold to £10,000
a year, £200 a week. This should be paid for by removing tax reliefs which enable the very well-off to avoid income tax. I am sticking with the idea of a mansion tax, a one per cent charge on property over £2 million. This is also a way of getting non-doms to pay tax; you can’t move a mansion to Monaco or the Caymans.
If we are looking for more tax money, the place to start is with the banks. Some are making very large sums on the back of a taxpayer guarantee and we should demand a fee for this – ten per cent of profits. These are the people who got us into this mess and splattered the nation’s account in red ink. They should get out of their pin stripes, roll up their sleeves and take the lead in cleaning up.
In today’s Times, Lib Dem deputy leader and shadow chancellor Vince Cable advocates a 10% tax on bank profits to fund a ‘safety net’ until finance houses can be broken up and are no longer too big to fail. Here’s an excerpt:
Some bankers might claim that they are doing God’s work. But the banks all owe their continued existence to the British and American taxpayer.
Some have been supported directly — RBS, Lloyds-HBOS, and the fully nationalised Northern Rock — but all benefit from the guarantee that they will not be allowed to fail. UK banks have received the equivalent of
It’s Sunday. It’s 7am. It’s time to find out how peanut butter is made. But first, the news.
2 Big Stories
Gordon Brown floats idea of tax on financial transactions
Prime Minister Gordon Brown’s idea of a financial transactions tax has received a lukewarm response from G20 countries.
The proposal, which took delegates by surprise at the meeting in St Andrew’s overshadowed other items on the agenda.
The US said it would “not support” a transaction tax and Canada added it was “not an idea we would look at”.
The Conservatives said that Downing Street had previously “poured cold water on this proposal” and that the Treasury had called it “unworkable”.
Chancellor Alistair Darling said the leaders had agreed the International Monetary Fund should now consider the possibility of introducing an international transactions tax, which would be used to create a fund for bank bailouts. (BBC)
It’s Sunday. It’s 7am. And we’ve got the definitive musical proof that Australian Premier Kevin Rudd is not US President Barack Obama. But first, the news.
2 Big Stories
Government to set up bank chains
Done well, this could be rather good news. A bit more competition in the banking sector could improve service, reduce costs and – by undermining some of the basis for massive bank profits – indirectly help deal with massive bonus payments:
Three new High Street banking chains are to be created by the government by 2015 as part of a major overhaul.
They will be set up by breaking up Royal Bank of Scotland, Lloyds and Northern Rock, the banks it partially or wholly controls after bail-outs…
The aim of the new banks is to increase competition and recoup taxpayers’ cash.
The government, which holds a 70% stake in RBS and a 43% stake in Lloyds after last October’s bailouts, hopes to announce the sell-off plans on Tuesday.
The new banks will be standard retail banks concentrating on deposits and mortgages.
They will be sold to new entrants to the banking market and not to existing financial institutions. (BBC)
Over at The Guardian’s Comment Is Free, Lib Dem deputy leader Vince Cable argues that simply “bashing bankers” will not solve the inherent structural problems in the banking system, and urges a considered response to address the issues. Here’s an excerpt:
Of course people are angry, and they have every right to be, especially when so many are losing their jobs in a recession triggered by a banking collapse. There are, however, different types of banks. Bonuses are a big issue in investment banks from proprietary trading, but are rare in retail banks. Some banks over-reached themselves and have been nationalised
Over at The Times, the Lib Dems’ shadow chancellor Vince Cable argues that the Financial Services Authority’s review on mortgages doesn’t go far enough to prevent a return to banks’ wild excesses. Here’s an excerpt:
Some of the more aggressive banks, seeking to expand their market share, are relaxing their offerings in terms of loan-to-value ratios. Any eagerness to return to former lending practices should be a source of concern. The housing market has not adjusted, at least yet, to realistic levels. Historical trends show a cyclical pattern of boom and bust, lasting roughly 15 to 20 years, going back to
Writing in the Mail yesterday (yes, the Mail: the newspaper which last week published the most complained-about article in British history) Lib Dem deputy leader Vince Cable contrasts two of the big stories of the last week: the investment bankers, announcing record bonuses, alongside the news of another big rise in unemployment. Here’s an excerpt:
A year after the collapse and rescue of the banking system by the taxpayer, the number of British workers without full-time jobs is still rising: 120,000 more in the three months to August.
But the big international banks – mainly US-owned but major players in
With the head of the Financial Services Watchdog, Mr Airhead Turner, placing bankers on a scale between Socially Awkward and Totally Useless, people have been coming up with plans to curb excessive bonuses. Mr Airhead himself floated the idea of a transaction tax or Tobin tax, where you charge the bankers for passing money across the border.
Captain Clegg and the Liberal Democrats don’t think this would work, because the bankers would just pass their money over everyone’s border but ours!
We’d rather see bonuses cut down to size by cutting the BANKS down to size, breaking them up so they are no longer too big to save when it turns out that they are too big to let fail.
For the Conservatories, Master Gideon Oboe said that if banks didn’t stop awarding big bonuses he would have the regulator write them a VERY STERN letter, warning them that he would not sign off on their pay package. And if they persisted in paying out, well, he’d write them ANOTHER very stern letter! That would sort them out.
And Mr Frown, the Prime Monster himself, promised to try very hard to put a STOP to that sort of thing, and then tried very hard to scupper Monsieur Sarcastic and Ms Angular Meercat’s plan to ACTUALLY stop that sort of thing!
I think it is time to put a fresh proposal on the table.
Lib Dem leader Nick Clegg has queried the “workability” of a suggested tax on banks to curb excessive bonuses. Lord Turner, head of the UK’s finance watchdog, has suggested taxing banks’ financial transactions. The Treasury has urged restraint on bonuses but stressed taxation was a matter for the chancellor. Mr Clegg said the idea had practical pitfalls but agreed with Lord Turner’s “sentiments” and said that some banks needed to be broken up. …
Mr Clegg said there were real questions marks about the “workability” of a UK-only bank tax, given that most banks operated across
You would think from the news that the BANKS were the most important things in the British Economy.
And I’m afraid you would be RIGHT.
The financial sector is far and away the largest contributor to Great Britain’s Gross Domestic Product; our exports of financial services in 2007 amounted to TWENTY-ONE billion pounds, almost a tenth of ALL exports and more than from adding together our other two big sellers (that’s food and drink: £10bn and, embarrassingly, arms sales: £7bn).
Well now we’ve seen the results for the first half of the year for some of the BIGGEST BANKERS on the High Street. …
Yesterday Northern Rock – taken into public ownership 18 months ago – posted its figures for the first six months of the year. They made for eye-watering reading:
Nationalised bank Northern Rock made a pre-tax loss of £724m for the first six months of the year as its bad debts tripled. The Newcastle-based firm wrote off £602m in bad loans and expects that figure to be similar in the second half of 2009.
The bank revealed that 6.4% of Together mortgages – the 125% loan-to-value product now withdrawn – are more than three months in arrears, up from 2.14% a year
The phrase “bonuses are back” should fill us all with disgust. The taxpayer’s money is being used to support an industry which is in turn paying out staggering amounts to its employees in compensation. Barclays Capital, Barclays’ investment banking arm has announced that it has made profits of £3bn on the first six months of this year. This implies an average pay out of £100,000 for the 22,000 people that work there just for this period.
We should not be fooled by the idea that because Barclays did not receive any funds from the government directly that these profits are …
Peter Hirst Entering a race implies usually a commitment to win it. The idea should be not to win a hyporthetical AI race but to find the best compromise between using it w...
Peter Hirst You might get more volunteers if it was clearer that they have influence over who is approved and selected for Westminster seats compared with the Westminster o...
Peter Hirst You don't mention our so called independent nuclear deterrent. There is no reason why we can't merge it with France's. Why on earth do you need two nuclear dete...
David Evans The one thing that this article shows is that it is impossible to establish a strategy that makes us clearly different from the other parties if we stick to our...
Peter Hirst To underpin and solidify a federal devolved structure there must also be the accompanying infrastructure. To prepare for this larger regional governance our edu...
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