So, apparently there are 5,000 bankers who will get million-pound bonuses this Christmas...

[edam]

wonder whether anyone would back my single-issue 'let's take it ALL off them and raise £5bn to pay off the national debt' party?

I am liking this quote I just saw from one of the trade unions ...

Paul Kenny, general secretary of the GMB, said: "Action to tax bonuses paid to bankers is long overdue. It is incredible that the banks would even consider reinstating the bonuses. It is almost as if the bankers have been out to lunch for over a year and have just come back into the office. There is a cultural issue here that needs to be addressed and the public will support the government in dealing with it."

If you want to tax the cause of the financial crisis you should tax the unearned income that people make when they sell their house for more than they bought it for.

Taxing income rather than wealth is a negative thing to do. It increases social inequality and makes social mobility more difficult.

If you inherited a large house from your family twenty years ago, you;re probably sitting on an asset that you could sell for £££££ tax free. Completely unearned income - and this way the rich get richer and the poor get poorer. If you were the first person in your family to go to university, and then focussed yourself on getting a high-paying job to improve your family's security, you're characterised as 'fat-cat' and a fair target for heavy taxation. This is narrow definition of 'rich' makes no allowance for how much accumulated wealth you have, very little allowance for how many children you;re supporting, and zero allowance for supporting elderly parents.

The proposal scapegoats one profession and one pay structure. 'Bankers' (i.e. people who work with financial transactions in a BANK rather than a hedge fund, insurer, legal firm, government or consultancy) who are paid 'bonuses' (i.e. defer a large part of their income to an annual profit-sharing payment, to allow their employer flexibility with regards to the the uncertainty of how much it is reasonable to pay out from year to year).

I am such a leftie Kif that now I read your post I am thinking it would be good to tax house sales in the way that you suggest AS WELL AS capping bankers bonuses

With the money from the new upward mobility tax to be spent on new public sector housing, which will in turn act as a sort of Keynesian driver to the construction industry...

AT, point is successive governments have run the economy in such a way as to benefit the City and financial services, have allowed scandal after scandal without doing much about it, and have neglected other parts of the economy such as manufacturing. Ever since Thatcher decided we should go all out for service industries... our successful EU neighbours have far more balanced economies (and are coming out of recession first).

Bankers and financiers keep trumpeting 'oh, the City contributes a massive % to the economy' as if this is a good thing. It ain't. It makes us over-dependent on that sector.

We need to cut the City down to size, ditch all this crap about 'wealth creation' (it's just an exaggerated way of saying 'making money') and start earning a living as a nation from actually doing stuff that is useful. Get a better balance of activity. Banking should be a support function for business, not the be-all and end-all of our economy.

And if many of the bankers and mega-rich fucked off overseas, it would be a positively good thing. Trickle-down theory was discredited more than a decade ago and massive inequalities in income and assets are positively bad for society, bad for health, bad for mental health, bad for children, bad for everything and everyone. Apart from the super-rich. But even they need an educated, healthy, averagely happy and motivated workforce - someone to clean their houses, educate their kids, nurse them through illness...

We should reward people who do socially useful jobs and contribute to society, as well as those with talent. I don't think following a herd of gamblers in the financial markets really counts.

Most of the problems in the run up to the "credit crunch" were caused by mortgage and credit lenders offering ridiculous amounts to "ordinary people" who had no hope of repaying the extraordinary debts they incurred and all of whom had eyes bigger than their pockets. The folks who are the real bankers - who are not money lenders and mortgage providers, are now paying the price for these hapless fools and what they have done to the financial markets and the expectations of those same "ordinary people" who now - having spent like super stars - think they are owed someone else's head on a plate.

Edam you are so angry! You should be turning cartwheels today - you got what you wanted.

NB: Saying things like "If the mega-rich fucked off overseas" really lets your argument down as it makes you look like you have a bit of a chip on your shoulder. And it's really not polite to slam thousands of perfectly decent people as being scurrillous and socially-useless. Do you know them all people who work in banks? Do you know any??? I doubt it, otherwise you'd understand that only a tiny proportion have anything to do with playing the stock-market.

What's under discussion here isn't to do with incentivising manufacturing though, is it? It is about the politicking witch-hunting band-waggon.

I might note that the OP is a journalist. A profession renowned for its impeccable moral compass and tangible contribution to the wealth and wellbeing of the country.

Journalists of course hold no blame at all in whipping the country in a get-rich-quick bubble. They earn their living through rigorous intellectual analysis and never succumb to rehashing press-releases and cliches. We - the public - allow journalists a voice in our lives day after day, trusting them as a wise friend who looks out for our interests.

Perhaps it would serve better to protect the country if journalists' earnings were required to be held in a ring-fenced trust, to be paid out at intervals subject to the quality of the journalists work having stood the test of time. If an article is shown to have been irresponsible, ill-researched or untrue then the taxman would take control of the earnings from that work for the benefit of public education projects. I'd include Phil and Kirstie in those rules too....

Kif I agree. There are so many people and industries responsible for the recession. From the nurse who maxed out her interest-free credit cards to lavish toys on her kids to the bastards at Foxtons who pushed up everyone's house prices to the journalists who foretold the doom and, with a click of their fingers, made it happen. Yes, some bankers behaved unforgiveably. But most didn't.

I thought that my now PM, lovely Mr Berlusconi, was the only one who blamed the recessions on the journos. LOl!!!

For God's sake people - the credit crunch was caused mostly through dodgy mortgages, loans and credit cards. Nobody in Canary Wharf does any of this! You can't rock up to Morgan Stanley in your lunch break and ask for an extra grand on your overdraft.

Bankers are being made scapegoats. An easy target. A very populist budget report today.

Nah, I've been thinking of A-level history and wondering when this modern-day South Sea bubble would pop for many years now.

AT42, point is bankers keep threatening that if we don't let them be incredibly greedy with taxpayer's money they will fuck off overseas and then we'll be sorry. To which the only response is fine, fuck off then.

As for mortgages, I think you are missing the bankers and traders and economists who devised and played with those terribly sophisticated instruments for wrapping up and selling debts so that everyone believed they could play pass the parcel for ever, making shedloads every time the bundle changed hands and never having to stop.

Re. journalism, I've never written anything about mortgages or personal finance, although I did work for a (different) bit of Which? at one stage. And the pay in journalism is crap apart from celeb columnists on the nationals (re-written by badly paid subs) btw so no chance of the taxman earning much from us. (Mostly because journalists are more interested in the job and the thrill of the chase/holding people in power to account rather than their own pay packet. Which bankers may consider rather daft.)

This is nothing about maximising what the taxman earns and everything about political opportunism. If it was about the taxman then it might have been - say - an increased corporation tax on profits above a certain level. The alternative to paying bonuses out of profits is paying dividends out of profits - not quite sure why the people that work for banks are considered so much less deserving than the people that own banks.

Franca - it's not so much that I (entirely) blame the journos for the crisis. It's just that journalists come pretty high in my list of 'soulless leeches on the country'. That happened around the time that I started having to turn off the radio on the hour every hour because i didn't want my Dd to ask questions about the endless graphic gratuitous descriptions of Sally-Ann Bowman/ Baby P violence in the news broadcasts.

The banks seem to operate on the idea that they are used to being rich and they therefore cannot possibly be poor even if they have to take money off the taxpayers to do it.

And what can the government do...not a lot.

"Have some free money and use it to knock down my house while you are at it"

I said this earlier in the thread and I will say it again.

This is all as much about perception as reality. I cannot for the life of me understand why the state-owned banks are even considering paying these large bonuses.

Yes, I understand contractual obligation, retention of talent and all of that stuff.

But whilst all this is going on other workers in other professions have taken pay cuts this year - anyone related to construction a good example.

The architect husband of one of the girls in my mummies group - on short time working most of the summer
In engineering consultancy - rounds of redundancies and fees slashed 50%
Skilled construction workers seeing a 30% or more drop in wages because firms are bidding so low on jobs

And these are all people who are trained, qualified and experienced.

And the nurse who maxed out her credit card who someone mentioned earlier on this thread as being just as much to blame as the bankers - well, she will take her share of the fall - pay capped for her this year.

Why RBS (and others) have chosen to take their 'you're denying us our rightful reward' stance beats me. How incredibly short-sighted. We are all of us being denied what we might think to be our rightful reward at the moment - whether that's the mum who has to go back to work before she wants to, the DH who is putting in 12 hour days at his £20K pa job because every else has been made redundant and he's for the chop too unless he picks up the slack, the graduate who can't get a job .. and I could go on.

What I would do (have already done) if I were RBS:
*announce a curb on bonuses for this year
*send out a couple of senior members of staff to talk on telly about how and why they're doing their duty for Britain
*say that they're putting their best people on making back the money the state invested
*and when they've begun to make it back they'll look again at the bonus pool

You read it here first RBS ....

Agree Mrs B. A friend's company was recently saved by a last minute Gov building contract, but there was no talk of a bonus as well. In fact he agreed to take a pay cut, which was not written into his contract! As an engineer he is far more skilled and valuable than a banker. Why should they have a bail out and a bonus.

I know many investment bankers(!) and see that entry to their trade is at graduate or intern level. Progress to senior levels is very fast and at some banks people are retiring at 35-40 having made their millions. Therefore it's reasonable to suggest that those who won't accept the consequences of recession like the rest of us should leave, they are entirely and very quickly replaceable.

kif, it's not the people who work for banks that will get penalised by this measure. It's the banks themselves.

Anyway, they will all find ways round it I'm sure.

I think what this thread proves is that there are lots of people in banking and financial services who just don't get it. Still. Their incompetence and over-estimation of their own talents - 'hey, we've invented these clever instruments that allow us to roll up bad debts and trade them with no risks at all!' - brought the world to its knees.

But they don't think they should have to share any of the pain they have caused. Or appreciate in any way that they are living on taxpayers' money. Because it's back to the tired old pre-crash arguments about how important they are, how special they are, how talented they are and how they will fuck off overseas if we don't stuff their mouths with gold.

Fine, let's see how it works. I think most of the population would be happy to take the risk. The banking sector is too big and too dominant a part of our economy. Let's cut it down to size, so it becomes once again a function rather than the star of the show. Invest in manufacturing - industries that our neighbours, like Germany, have retained rather than ignored.

Okay, we bailed them out. Still in recession. Debt still growing. We did this with an eye to the pardigm changing. The top-level bankers don't want that to happen. They want to keep on the way it was.

Tough.

Alcatraz who are you to say your friend the engineer is "far more skilled and valuable than a banker"? My husband and my sister happen to work in banking. They both have Oxbridge degrees, hard-earned MBAs from top business schools and put in 70-80 hours a week making a lot of money for a well known investment bank (which has NOT been bailed out) and its share-holders.

You would come down on me like a ton of bricks if I said my husband was "more skilled and valuable" than somebody working for a building company. Yet it's ok for some of you to say some very damning and hateful things about an entire industry of men and women you know absolutely nothing about beyond what you read in your tabloids.

There are some very narrow-minded and judgemental people posting on this forum.

By the way, there is a far more intelligent, reasoned debate on the In The News forum. Those of you who have had enough of this petty, socialist-worker, bash the suits crap might like to take a look. Nobody on there says "fuck off bankers" in every other sentence.

Um, for those of you saying "let them f**k off overseas" ...you do know that City trading, banking and financial services constitutes 40% of the UK's GDP

It would have cataclysmic effect on our economy if they did indeed f**k off elsewhere...

Paris and other capitals are just ITCHING to get their hands on this business

I'm as appalled as the next person about what has happened - pensions going up in smoke etc - but the real failure here has been one of regulation.

Tost outrageous aspect of this issue. All of these failures should be addressed through the courts and it's not happening ...

why not?

... because virtually every major law firm in the UK has a bank as a client ... and therefore no lawyers will become involved in cases on behalf of bank customers owing to conflicts of interest.

sorry - typing too fast

meant to say

"the most"

instead of "tost"!

OMG I cannot believe the level of naiievety and basic lack of knowledge on this thread about our economy ! Do people really think that it is the mark of a civilised society to punish all bankers for the mistakes of a few ? Its ridiculous .. why arent you all shouting at the government and demanding to know where the regulators were ? The vast majority of bankers are totally normal hardworking men and women who deserve their salaries - they are NOT out of touch - indeed most of them will have at least one, if not many colleagues who have lost their job this year ..redundancies, petrol prices - all these things are affecting ALL OF US .. Bankers arent immune !

I' m glad to see that there are some of you who know what really has taken place and the consequences for our future if the banks were either allowed to fall or were all our best financial minds decide to emigrate - otherwise I think Id be running for the airport to emigrate myself !

My husband is in banking and he works ridiculous hours and under extreme amunts of pressure which most of you will have really no idea about.. Why the hell shouldnt he get a bonus this year if he is fortunate enough to be awareded one - he has worked for it...
However - there have been no bonuses in our house for about a decade ...

How can people be so small minded and jealous that they are falling for the bureacratic crap that is just another attempt by the political parties to get you to avoid noticing all the other issues going on ..not least the NI situation at the moment..

Wake up ! Its not all cut and dried !

that's a cynical view, still... but you are probably right!