This week ahas exposed yet another example of the Tories talking tough but doing nothing when it comes to reforming the financial system and taking action on bankers’ pay.
Arlene McCarthy MEP is Labour’s European spokesperson on economic and financial affairs
This week a European Parliament vote has exposed yet another example of the Conservative Party talking tough but doing nothing when it comes to reforming the financial system and taking action on bankers’ pay.
The out of control pay culture in banks was a key factor in the reckless behaviour which led to the crisis. Last year I steered through tough new laws to change the way bonuses are paid, linking them to longer term performance, not short-term reckless profit chasing.
Those rules are now being put in place. More must be done to enable shareholders to hold the senior management of their companies to account, and bring down the obscene overall level of pay in this sector.
Transparency is key to this and Euro MPs now have the opportunity to take forward plans to make banks more open about their pay deals. The Conservative-led government claims to want more openness.
The previous Labour government legislated to require banks to declare how many high earners they have on their books; the new government shelved this legislation but when challenged by Ed Miliband at Prime Minister’s Questions David Cameron said (Hansard, November 24, 2010; column 261):
“David Walker [author of a UK review into corporate governance in banks and financial institutions] has carried out that review and made his report.
“He has made it very clear that he thinks we should make progress with the transparency agenda at the same time as other European countries. That is a view we think should be taken into account.”
So why then did Ashley Fox, Conservative Euro MP drafting the European Parliament’s position on new EU rules on corporate governance in the financial sector, fail to put forward a singe proposal to address the out of control pay culture?
Do the Conservatives think that the massive amounts spent on bankers’ pay is not of concern to shareholders or the public?
If Conservatives are committed to reform and starting a campaign for this in Europe, why was it left to Labour Euro MPs to table proposals on transparent pay? We put forward requirements for financial institutions to publicly declare how many people earn more than €500,000 (£435,000) per year, with a breakdown by bands of €500,000, reinstating at EU level the rules the ConDems shelved in government.
And how did Ashley Fox respond to our amendments?
He manoeuvred behind the scenes to double this threshold, raising the €500,000 limit to a million, making sure that thousands of the Tories’ friends in the City would not be covered by these transparency rules.
Last year we saw the government make tough pronouncements in the media about acting on bonuses, while at the same time attempting to water down proposals when out of the public eye. Now once again we’ve seen tough talk from the coalition, but no action.
Yet again it shows only Labour can be trusted to fight for transparency on bankers’ pay.Like 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.