The bankers' windfall tax has failed to curb the bonus culture. The Government should listen to over 100 MPs and announce a High Pay Commission.
As this week we brace ourselves for the New Year round of announcements on UK bank profits (which will be kicked off by JP Morgan this Friday), it’s significant that over 100 MPs have now signed up in support of Early Day Motion 191 that calls for a High Pay Commission.
JP Morgan are expected to report bumper profits coupled with plans for excessive bonuses (despite the Bankers’ Windfall Tax), with other banks bound to follow suit. Soon after, a number of things will begin to become very clear.
First, that the popular one-off Bankers’ Windfall Tax, first championed by Compass and others, will almost certainly raise billions in extra revenue for the Treasury, not the modest £500 million originally forecast in the pre-Budget report in December – this is good news for the government in clawing back some of the hundreds of billions spent in bailing out the banks.
Secondly, however, and perhaps more important is that as a short-term, one-off measure, the Bankers’ Windfall Tax is likely to have largely failed to curb the culture of excessive rewards in the City – which the Chancellor, Alistair Darling, stated in December was the chief reason for introducing the one-off levy. This should worry us all.
We literally cannot afford as a country to allow the City to go back to business as usual – because if the government fails to act and we allow the culture of excessive rewards to continue unchecked then watch out for another financial crisis – something we would be unable to pay for.
As a result there is now a more compelling case than ever for the government to urgently establish a public High Pay Commission. Only then will the government be able achieve the aim of a lasting and long-term settlement to the issue of high pay and excessive rewards and effectively tackle the bonus culture.
That is why growing numbers of MPs, from a range of parties, are supporting the call for a High Pay Commission and the reason why the number will only keep growing in the days ahead as we hear of more windfall bank profits coupled with plans for exuberant and largely unearned windfall bonuses.
So while we should all be delighted that the Bankers’ Windfall Tax will raise billions of extra revenue for the government to use for socially useful purposes, not least in helping our unemployed young people, we must now see the government take further action to curb the excessive bonus culture. It would make a very good start by committing to establishing a public High Pay Commission so we can find a lasting solution to the problem of excessive pay.
Our guest writer is Gavin Hayes, General Secretary of CompassLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.
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