Osborne bank meeting latest victim of weather woes

Monday, 20 December 2010 11:15 AM

By Peter Wozniak

A key meeting between bank bosses and ministers has been cancelled due to the chaos caused by the weather.

Tensions over the Christmas round of bank bonuses were to be the subject of today's planned talks between the chancellor, business secretary and the heads of Britain's biggest banks.

But the meeting has been postponed for the time being due to the chancellor becoming the latest victim of the adverse weather conditions, stuck as he is in New York.

It is understood that Vince Cable and George Osborne were going to call for the financial sector to refrain from excessive payments in the next bonus round, with the threat of additional action against banks if they fail to do so.

Shadow chancellor Alan Johnson commented on the cancelled meeting: "It's no wonder the meeting on bankers' bonuses has been called off - all the Tory-led government has to offer is hot air.

"George Osborne won't even enforce rules already in place, requiring banks to publish details of bonuses over £1 million."

As the impact of the spending review begins to become apparent in the coming months and years, the government is particularly anxious to avoid the impression that banks, particularly those who have received direct public bailouts, are back to pre-crisis levels of bonus payments whilst the public sector is being heavily cut back.

Business secretary Mr Cable implied on the Andrew Marr show yesterday that the possibility of further taxation remained on the table: "We can't go through the winter series of bonuses without real restraint and social responsibility."

"If they don't behave, if they don't take account of their wider responsibilities the government has, as a possibility, some form of taxation, various ways of doing this.

"But we would rather they accepted that they had wider obligations to British business and to the public."

In recent weeks, ministers have upped the intensity of rhetoric on enforcing restraint on bank remuneration. Last week, deputy prime minister Nick Clegg said: "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."

It remains unclear however how exactly the government will apply policy to reform the banking sector. And independent commission on banking is set to report next year.

Although the coalition has made much of its action to levy £2 billion from the banks, the one-off 'bonus tax' introduced under the last government was cancelled. But ministers insist reintroducing it in some form remains possible.

Tags:
• banking crisis
,
• economy
,
• economy and finance