The government prepares to “stand idly by” on bankers’ bonuses

Nick Clegg waters down his rhetoric and gives no indication of measures to enforce restraint in payo

On Radio 4's Today programme this morning, Nick Clegg appeared to confirm speculation that the government is backing away a big confrontation with the banks over excessive bonuses – if only through his reticence.

Let's just recap. A month ago, the Deputy Prime Minister was full of fiery rhetoric, telling the Financial Times:

The banks should not be under any illusion, this government cannot stand idly by.

They don't operate in a social vacuum. It is wholly untenable to have millions of people making sacrifices in their living standards, only to see the banks getting away scot-free.

Yet today, this was substantially watered down:

I totally accept that the kind of sky-high numbers bandied about in the City of London sound like they come from a parallel universe to most people. State-owned banks have to be sensitive. The British public are the shareholders of those state-owned banks. We are entitled to say – as the government has – that they must be sensitive.

Asked by the show host James Naughtie what action the government would take to force the banks to listen, Clegg refused to give any solid answer, simply saying "they have to listen to us because they're state-owned".

Lest we forget, the coalition agreement pledged "detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector". But in a marked contrast to his words in December, Clegg appeared to deny – or lay the ground for denying – the need for further action:

We're in discussion with the banks, and we've already done a great deal as far as the banking system is involved . . .

It's worth remembering that new rules have already dramatically changed the way bonuses are structured.

The new rules that he is referring to are reforms from the EU and the Financial Services Authority, meaning that at least half of bonuses now have to be paid in shares, and between 40 per cent and 60 per cent cannot be cashed in for several years.

But the idea that making employees into shareholders will reduce their risk-taking behaviour is misguided. Lehman Brothers is a case in point – employees there were large shareholders, but that did not stop them from hastening its collapse. Moreover, even if the gratification is delayed, it still exists. Shares can be cashed in eventually, and the incentive for irresponsible risk remains.

Even if the bonus pool is smaller than last year's, the sums involved will still feel like an insult to ordinary people bracing themselves for the full pain of the government's austerity programme.

Clegg may still feel a personal distaste for large bonuses, but his words today indicate that "standing idly by" is precisely what the government will be doing.

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

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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