Miliband’s smart move on bank bonuses

The Labour leader’s call for an extended bonus tax is good politics and good economics.

Ed Miliband's decision to call for the extension of the tax on bankers' bonuses is good politics and good economics. At a time when ministers are backing away from a confrontation with the banks, Miliband has seized an opportunity to win favourable headlines. The coalition will struggle to oppose him without implying, as Peter Mandelson once put it, that the rich have "suffered enough" (not a popular political message in these straitened times).

So long as the banks refuse to show pay restraint, it makes sense for the government to raise some much-needed revenue. Alistair Darling's original 50 per cent tax on bonuses over £25,000 raised £3.5bn, four times more than the government originally forecast. By contrast, the coalition's bank levy is expected to raise just £1.25bn. Miliband's suggestion that now is the wrong time to be "cutting taxes for the banks" will resonate with voters suffering the biggest squeeze on living standards since the 1970s.

It's worth adding that Darling's tax did not lead to an "exodus" from the City of London. An analysis by PricewaterhouseCoopers found that the gap with other jurisdictions was not wide enough to justify a move out of London. As the FT's report noted:

[A] married banker with two children, one of them aged under six, with gross income of £250,000 and a mortgage of £750,000, would net £141,000 in the UK, after deductions for tax and social security, according to PwC's calculations. In Geneva, that same employee would take home about £156,000, 11 per cent more.

The gap with other European financial centres and the US is significantly smaller. The same worker would net £150,000 in Paris, £149,000 in Frankfurt and £145,000 in New York . . . While the tax hit becomes much more significant among top earners, such as those earning in excess of £1m, it is difficult for senior bankers and traders to relocate in isolation, without more junior employees on their team or support functions.

Miliband's announcement is tailor-made to appeal to two of the groups he is most concerned with: "the squeezed middle" and disaffected Liberal Democrats. Senior Lib Dems were exasperated by Cameron's suggestion that the banks are "an easy scapegoat" and few are more angered by the bankers' recklessness than the middle classes. It's hardly election-winning stuff but, in the current circumstances, a little bit of populism will do Miliband no harm.

George Eaton is political editor of the New Statesman.

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Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland