Labour pins Osborne down on bank bonuses

The party challenges the Chancellor to veto any move by RBS to double the bank bonus cap under new EU rules.

It's bonus season again in the City and Labour has spied another opportunity to inflict embarrassment on the coalition. Under new rules passed by the EU, bonuses must be no larger than bankers' basic salaries. But a loophole means that they can be up to twice as large provided that banks win shareholder approval. In the case of RBS, which is still 81%-owned by the taxpayer, that means the government. 

While the new EU cap, which George Osborne is challenging through the European court, won't apply until next year's bonus round, Labour is demanding that the Chancellor pre-emptively vow to block any request by RBS to exploit the loophole. Shadow chief secretary to the Treasury Chris Leslie, who has tabled a Commons motion on the subject for today, said last night: "At a time when families face a cost-of-living crisis and bank lending to business is falling, it cannot be right for George Osborne to approve a doubling of the bank bonus cap. It shouldn’t have taken the EU to act to rein in excessive bonuses, but there has been no action from the Chancellor here in Britain.

"As the majority shareholder, the government should reject any request from RBS to increase the cap. We will put this to a vote in the House of Commons as part of our opposition day debate on the Government’s wider failures on banking. The case for repeating Labour’s tax on bank bonuses, to fund a compulsory jobs programme for young people, is getting stronger by the day."

Here's the full text of Labour's Opposition Day motion: "That this House believes that Government reforms have failed to deliver a competitive banking system which serves the interests of consumers or the needs of businesses and the British economy; is concerned that customers have limited choice and low levels of trust and confidence in the banking market; is disappointed that recent legislation has fallen short of the recommendations of the Independent Commission on Banking which called for action to diversify the sector and ensure that major new banking service providers are created; believes that banker remuneration remains unacceptably high and regrets the fact that it has taken the EU to act to rein in excessive bonuses in Britain in the absence of domestic action but believes the government as a majority shareholder in RBS should not approve any request to increase the cap; and calls on Ministers to prevent a return to business-as-usual in the banking sector which continues to require real reform and competition so that the UK can earn its way out of the cost-of-living crisis."

The official line from RBS is that "no decisions have been made" but the likelihood is that chief executive Ross McEwan, who believes high levels of remuneration are vital to maintain the bank's competitiveness, will seek the highest bonuses possible at RBS's annual meeting later this year. In response, the Treasury said: "Our normal principles apply. There needs to be restraint. Bonuses need to be significantly down on where they were at the time of the crisis and in the last parliament."

But this only prompts the question of why Osborne is resisting any official cap on bonuses. The answer from ministers is that as Andrew Bailey, the head of the Prudential Regulation Authority, has said, any limit will "just increase base pay, reduce claw back and undermine financial stability". But Labour will no doubt remind Osborne of his declaration back in 2009 that "It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees. It must stop." The Chancellor's volte-face has handed the party another chance to accuse him of "standing up for the wrong people. 

Meanwhile, as Newsnight reported last night, Ed Miliband is preparing to announce new proposals for banking reform in his speech on the economy on Friday. While Labour sources are distancing themselves from the idea of a 25% cap on market share, Miliband's intent is to end the dominance of the "big five" (RBS, Barclays, Lloyds, HSBC and Santander) and to make it easier for smaller players to enter the market, potentially by forcing larger banks to sell some of their branches. It's a good example of what the Labour leader meant when he spoke in his New Year message of the need to make "big changes in our economy". The aim is to show that he has a plan to deliver a permanent improvement in living standards, rather than merely a temporary one, (by improving lending to small businesses) and an answer to the "too big to fail" problem. 

On the Today programmme this morning, Chris Leslie spoke of how bank customers feel "there is no point in switching" because "they're all the same" and denounced the government for "consistently falling short of rising to the challenge of what needs to be done". He also described the "high rolling bonus culture" as part of "the old economic construct", a sign of how shadow ministers are now echoing Miliband's long-standing call for a transformed capitalism. 

George Osborne speaks at the Conservative conference in Manchester last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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“I felt very lonely”: addressing the untold story of isolation among young mothers

With one in five young mothers lonely “all the time”, it’s time for employers and services to step up.

“Despite having my child with me all the time, I felt very lonely,” says Laura Davies. A member of an advisory panel for the Young Women’s Trust, she had her son age 20. Now, with a new report suggesting that one in five young mums “feels lonely all the time”, she’s sharing her story.

Polling commissioned by the Young Women’s Trust has highlighted the isolation that young motherhood can bring. Of course, getting out and about the same as you did before is never easy once there’s a young child in the picture. For young mothers, however, the situation can be particularly difficult.

According to the report, over a quarter of young mothers leave the house just once a week or less, with some leaving just once a month.

Aside from all the usual challenges – like wrestling a colicky infant into their jacket, or pumping milk for the trip with one hand while making sure no-one is crawling into anything dangerous with the other – young mothers are more likely to suffer from a lack of support network, or to lack the confidence to approach mother-baby groups and other organisations designed to help. In fact, some 68 per cent of young mothers said they had felt unwelcome in a parent and toddler group.

Davies paints what research suggests is a common picture.

“Motherhood had alienated me from my past. While all my friends were off forging a future for themselves, I was under a mountain of baby clothes trying to navigate my new life. Our schedules were different and it became hard to find the time.”

“No one ever tells you that when you have a child you will feel an overwhelming sense of love that you cannot describe, but also an overwhelming sense of loneliness when you realise that your life won’t be the same again.

More than half of 16 to 24-year-olds surveyed said that they felt lonelier since becoming a mother, with more than two-thirds saying they had fewer friends than before. Yet making new friends can be hard, too, especially given the judgement young mothers can face. In fact, 73 per cent of young mothers polled said they’d experienced rudeness or unpleasant behaviour when out with their children in public.

As Davies puts it, “Trying to find mum friends when your self-confidence is at rock bottom is daunting. I found it easier to reach out for support online than meet people face to face. Knowing they couldn’t judge me on my age gave me comfort.”

While online support can help, however, loneliness can still become a problem without friends to visit or a workplace to go to. Many young mothers said they would be pleased to go back to work – and would prefer to earn money rather than rely on benefits. After all, typing some invoices, or getting back on the tills, doesn’t just mean a paycheck – it’s also a change to speak to someone old enough to understand the words “type”, “invoice” and “till”.

As Young Women’s Trust chief executive Dr Carole Easton explains, “More support is needed for young mothers who want to work. This could include mentoring to help ease women’s move back into education or employment.”

But mothers going back to work don’t only have to grapple with childcare arrangements, time management and their own self-confidence – they also have to negotiate with employers. Although the 2003 Employment Act introduced the right for parents of young children to apply to work flexibly, there is no obligation for their employer to agree. (Even though 83 per cent of women surveyed by the Young Women’s Trust said flexible hours would help them find secure work, 26 per cent said they had had a request turned down.)

Dr Easton concludes: “The report recommends access to affordable childcare, better support for young women at job centres and advertising jobs on a flexible, part-time or job share basis by default.”

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