British government has planned to meet bank bosses in a bid to scale down bonuses payable to bank executives for Christmas. The meeting planned on Monday is not happening, as the ministers are away and not able to reach London in time due to unprecedented cold weather.
Chancellor George Osborne and Business Secretary Vince Cable hope executives would agree to pay less themselves and lend more. It is not clear what action will follow if bankers reject government’s proposals. Mr Cable said the action would be robust but did not specify any action. The prime minister and the chancellor have emphasised the importance of banking to the British economy amid threats that some institutions could move their operations overseas.
The Labour government had passed legislation, backed by the Tories and Lib Dems, forcing banks to disclose bonuses of more than £1m but the coalition had so far refused to implement it. Labour criticized the government is not serious and the meeting is just a hot air to save their faces in the background of student strikes against tuition fee hike. Labour said their temporary tax on bonuses raised 3.5 billion pounds and there was large potential to tax bank bonuses for covering fiscal deficit.
However, bankers seem to be thinking otherwise. The British Bankers Association (BBA) said the industry "truly understands people’s concern over pay" but the bonus system was "radically different" this year, with recipients seeing the majority of their payments being "locked away for several years". They say indirectly that the bonuses are needed to face competition from other countries.