The "people's bonus": which people, and at what cost?

Could George Osborne's "people's bonus" rescue the Conservatives' election prospects?

In an interview in today's Sunday Times -- a day before the taxpayer-owned RBS and Lloyds banks are set to announce £1.5bn of bonuses -- the Tory shadow chancellor, George Osborne, outlines a new policy:

The bankers have had their bonuses. We want a people's bank bonus for the people's money that was put into these organisations.

What it boils down to is the idea of offering cheap shares in the taxpayer-owned banks to ordinary families when the government's £70bn of shares are sold off. The Sunday Times interview frames it as a Tory attempt to seize back the election and give a positive edge to what has been an overwhelmingly negative election campaign.

Osborne couched his suggestion in diction that plays into public anger with the banks, speaking of the need to "recapitalise the poor". This certainly appears to be in keeping with the public mood. A YouGov poll for the think tank Compass, published today, showed the extent of public anger with the financial system. Three out of four people said they did not think that the banks had changed, and that they were still not being properly regulated, while 76 per cent of people wanted a cap on bonuses and 59 per cent supported a windfall bonus tax.

But although Osborne talks the talk -- the "people's bonus" suggesting a pleasing settling of scores -- is it really such a revolutionary move?

In fact, the proposal is a direct, and conscious, echo of Margaret Thatcher's privatisation of British Gas and British Telecom in the 1980s, when the number of British shareholders tripled. "It will be like the public offerings of shares such as the Tell Sid campaign of the mid-Eighties," said Osborne.

This was vote-winning for Thatcher, but the climate has changed: as the Compass poll shows, much of the current anger relates to the perceived injustice of banks going back to business as usual amid insufficient regulation, while the rest of society continues to suffer. Selling off cheap shares will do little to tackle the perception of a sector running out of control as jobs are lost elsewhere.

Labour and the Liberal Democrats have jumped to attack the plans. On the BBC's Andrew Marr Show this morning, the Business Secretary, Lord Mandelson, dismissed it as "a silly little gimmick" and "headline-grabbing incoherence". He argued that it contradicted the Tory emphasis on reducing the Budget deficit, asking: "What on earth are they doing giving away the shares at a knock-down price?"

The Lib Dem Treasury spokesman, Vince Cable, also criticised the plan, saying that it "beggars belief" to encourage the less well-off to invest in a volatile stock market. "The nationalised and semi-nationalised banks should be reprivatised when the conditions are right to maximise taxpayer return," he said. "Selling shares off at a discounted rate will not achieve this."

They have a point: if the focus is on reducing the Budget deficit and ensuring that the taxpayers' money is returned, it makes sense to sell off the shares at a time that will make maximum profit for the government. Moreover, the demographic of those investing in the stock market is unlikely to include the least well-off, who will nonetheless bear the brunt in the extra taxation that will be necessary if the government has not recovered all the bailout money.

Of the people's bonus, then, we must ask -- which people, and at what cost?

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Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle