View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Politics
10 January 2011

Miliband’s smart move on bank bonuses

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

By George Eaton

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.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

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.

Content from our partners
Unlocking the potential of a national asset, St Pancras International
Time for Labour to turn the tide on children’s health
How can we deliver better rail journeys for customers?

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU