Brown promises action on bank bonuses

PM suggests that "clawback system" could be internationally agreed to end rewards for failure

Gordon Brown has said that international regulators must act faster to crack down on excessive bank bonuses.

He promised that Britain press for an international agreement to limit and regulate bonuses at the G20 summit in Pittsburgh on September 24.

In an interview with the Financial Times, Brown proposes a "clawback system" which could confiscate bonuses if deals end in losses.

"Remuneration has got to be based on long-term success, not short-term speculative deals," he said.

But he rejected calls to introduce a French-style mandatory cap on bonuses and argued it was important not to weaken incentives.

He added that he was confident that the fiscal stimulus implemented by countries including Britain, the United States and France was beginning to move the global economy out of recession.

"If you look at the position a year ago, we had people prediciting that the recession would become a depression, with people thinking their services would be at risk as banks collapsed," he said. But he warned that further measures would be needed to stabilise the "overheated" banking sector.

The Prime Minister was also more open about the need for public service spending cuts than he has been in the past. "Some departments in the last round of public spending had a settlement that was lower than the previous round," he said. "So there's no problem about saying you've got to make the right decisions about the priorities for the future."

Brown has modified his approach after cabinet ministers, including the Chancellor Alistair Darling, warned that his attempt to contrast "Labour investement" with "Tory cuts" was misleading and raised unrealistic expectations.