In my column in this week's magazine (go on, get a subscription), I look at the level of bank bonuses before and after the financial crisis.
Since the crash, mindful of what the Harvard philosopher Michael Sandel described as "bailout outrage", politicians of all three parties have indulged in banker-bashing. But as the graph below shows, there is a significant gap between rhetoric and reality.
Bonus payouts peaked at £11.5bn in 2007 – the year before the crash – and fell to £5.3bn in 2008 following the bailout. Yet since then, as general living standards have continued to fall, the bonus pool has exceeded £7bn for two years running.
With investment bank revenues falling, bonus levels are likely to be lower this year than in 2010. The 83 per cent state-owned RBS, which is expected to report a loss of roughly £613m, may pay nearer £1bn in bonuses than last year's £1.3bn. Such payments are at odds with the Tories' tough rhetoric in opposition, however. In 2009, George Osborne called for a ban on bonuses at banks that had received any sort of government guarantee. He later promised to block all cash bonuses over £2,000.
Osborne wasn't the only one. In his 2008 conference speech, David Cameron memorably spoke of a "day of reckoning" for the banks and, in his preface to the Liberal Democrats' manifesto, Nick Clegg declared that the banks should not be allowed to "ride roughshod" over the economy while handing out bonuses "by the bucketload".
The coalition's bank levy, which excludes the first £20bn of liabilities, is expected to raise just £1.25bn this year. By contrast, Alistair Darling's 50 per cent tax on bonuses over £25,000 raised £3.5bn last year.
Ministers rightly point out that the levy will raise more in subsequent years (£2.3bn in 2012 and £2.6bn in 2013) but they have yet to explain the shortfall in revenue this year. For reasons unknown, the government has set the levy at just 0.045 per cent this year but at 0.075 per cent next year and in following years.
The Financial Services Authority has ruled that at least half of all bonuses must be paid in shares rather than cash. But to voters facing the biggest squeeze in living standards since the 1920s, this is likely to be a distinction without a difference.