Balls hits out at Carney over bank bonuses

Shadow chancellor insists "there’s no prospect of an unhappy relationship" but says the Bank of England governor is wrong to oppose a cap on bank bonuses.

There was much resentment among Labour at how Mervyn King leant greater credibility to the coalition's austerity programme by publicly endorsing it after the election. So when Mark Carney told the Treasury select committee on Wednesday that he was opposed to a "crude bonus cap" (as supported by Labour) and warned that caps on banks' market share (the policy announced by Ed Miliband in his speech today) in the US failed to prevent, and may have even encouraged, the financial crisis, some in the party worried that history was repeating itself. 

Asked about this on The World At One, Ed Balls began by demonstrating his experience, revealing that he had known the Bank of England governor for "many years" (their paths will have crossed during Balls's time as Gordon Brown's chief adviser) and that he "spoke to him yesterday". He added: "I don’t think he’s suggesting that the thing that caused the subprime banking crisis, or the irresponsible lending to homeowners in southern America was too much competition and too much diversity in the US banking system. There was a massive regulatory failure in America, and in Britain too, and we need tougher regulation...we want more competition." 

When pressed on Carney's obvious scepticism of the idea of limiting banks' size, Balls emphasised again, "As I’ve said, I’ve known Mark Carney for a decade and there’s no prospect of an unhappy relationship." But he went on to note one unbridgeable difference between the pair: on bank bonuses. Balls said: "On the issue which he raised on Wednesday, of bank bonuses, and our view that pay and bonuses, where the bonuses are more than 100% higher than the salary, he disagreed with that. On that one, I’m going to disagree with the governor of the Bank of England. I don’t think that is the right approach for bankers’ pay. " This explicit criticism contrasted with the more emollient tone adopted by Chuka Umunna on Today this morning, when he said: "I think it’s not healthy for us to involve governors of the Bank of England in big political debates and I don’t want to drag him into that." 

While there is little political cost to Balls disagreeing with Carney on this issue, given the public's near universal hostility to bank bonuses, the Tories will hope that this is a hint of other differences to come. If the governor can help to encourage scepticism of Labour's plans for radical market reform, just as King did over fiscal stimulus, George Osborne will feel that he has earned every penny of his £874,000 salary.  

Ed Balls speaks at the Labour conference in Brighton last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Theresa May "indifferent" towards Northern Ireland, says Alliance leader Naomi Long

The non-sectarian leader questioned whether the prime minister and James Brokenshire have the “sensitivity and neutrality” required to resolve the impasse at Stormont.

Theresa May’s decision to call an early election reflects her “indifference” towards the Northern Ireland peace process, according to Alliance Party leader Naomi Long, who has accused both the prime minister and her Northern Ireland secretary James Brokenshire of lacking the “sensitivity and neutrality” required to resolve the political impasse at Stormont.

In a wide-ranging interview with the New Statesman, Long – who is running to regain her former Belfast East seat from the DUP for her non-sectarian party in June – accused the Conservatives of “double messaging” over its commitment to Northern Ireland’s fragile devolution settlement. The future of power-sharing province remains in doubt as parties gear up for the province’s fourth election campaign in twelve months.

Asked whether she believed the prime minister – who has been roundly criticised at Stormont for her decision to go to the country early – truly cared about Northern Ireland, Long’s assessment was blunt. “We have had no sense at any time, even when she was home secretary, that she has any sensitivity towards the Northern Ireland process or any interest in engaging with it at all... It speaks volumes that, when she did her initial tour when she was prime minister, Northern Ireland was fairly low down on her list.”

The timing of the snap election has forced Brokenshire to extend the deadline for talks for a fourth time – until the end of June – which Long said was proof “Northern Ireland and its problems were not even considered” in the prime minister’s calculations. “I think that’s increasingly a trend we’ve seen with this government,” she said, arguing May’s narrow focus on Brexit and pursuing electoral gains in England had made progress “essentially almost impossible”.

“They really lack sensitivity – and appear to be tone deaf to the needs of Scotland and Northern Ireland,” she said. “They are increasingly driven by an English agenda in terms of what they want to do. That makes it very challenging for those of us who are trying to restore devolution, which is arguably in the worst position it’s been in [since the Assembly was suspended for four years] in 2003.”

The decisive three weeks of post-election talks will now take place in the weeks running up to Northern Ireland’s loyalist parade season in July, which Long said was “indicative of [May’s] indifference” and would make compromise “almost too big an ask for anyone”. “The gaps between parties are relatively small but the depth of mistrust is significant. If we have a very fractious election, then obviously that timing’s a major concern,” she said. “Those three weeks will be very intense for us all. But I never say never.”

But in a further sign that trust in Brokenshire’s ability to mediate a settlement among the Northern Irish parties is deteriorating, she added: “Unless we get devolution over the line by that deadline, I don’t think it can be credibly further extended without hitting James Brokenshire’s credibility. If you continue to draw lines in the sand and let people just walk over them then that credibility doesn’t really exist.”

The secretary of state, she said, “needs to think very carefully about what his next steps are going to be”, and suggested appointing an independent mediator could provide a solution to the current impasse given the criticism of Brokenshire’s handling of Troubles legacy issues and perceived partisan closeness to the DUP. “We’re in the bizarre situation where we meet a secretary of state who says he and his party are completely committed to devolution when they ran a campaign, in which he participated, with the slogan ‘Peace Process? Fleece Process!’ We’re getting double messages from the Conservatives on just how committed to devolution they actually are.”

Long, who this week refused to enter into an anti-Brexit electoral pact with Sinn Fein and the SDLP, also criticised the government’s push for a hard Brexit – a decision which she said had been taken with little heed for the potentially disastrous impact on Northern Ireland - and said the collapse of power-sharing at Stormont was ultimately a direct consequence of the destabilisation brought about by Brexit.

 Arguing that anything other than retaining current border arrangements and a special status for the province within the EU would “rewind the clock” to the days before the Good Friday agreement, she said: “Without a soft Brexit, our future becomes increasingly precarious and divided. You need as Prime Minister, if you’re going to be truly concerned about the whole of the UK, to acknowledge and reflect that both in terms of tone and policy. I don’t think we’ve seen that yet from Theresa May.”

She added that the government had no answers to the “really tough questions” on Ireland’s post-Brexit border. “This imaginary vision of a seamless, frictionless border where nobody is aware that it exists...for now that seems to me pie in the sky.”

However, despite Long attacking the government of lacking the “sensitivity and neutrality” to handle the situation in Northern Ireland effectively, she added that Labour under Jeremy Corbyn had similarly failed to inspire confidence.

“Corbyn has no more sensitivity to what’s going on in Northern Ireland at the moment than Theresa May,” she said, adding that his links to Sinn Fein and alleged support for IRA violence had made him “unpalatable” to much of the Northern Irish public. “He is trying to repackage that as him being in some sort of advance guard for the peace process, but I don’t think that’s the position from which he and John McDonnell were coming – and Northern Irish people know that was the case.” 

Patrick Maguire writes about politics and is the 2016 winner of the Anthony Howard Award.

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