Labour turns up the heat over bonuses

Labour today stepped up the pressure on the government over City bonuses as the new chief executive of Barclays, Bob Diamond, stood firm against demands that he give up his potential £8m payout for 2010. Forcing George Osborne to the House of Commons dispatch box to defend his attempts to crack down on bankers’ bonuses, the shadow chancellor, Alan Johnson, said the coalition had gone “from the scent of rose garden to the stench of broken promises” since the election. The chancellor, who says we are all in this together, bows to the rich and powerful whilst bearing down on everyone else. His sneering arrogance will not get him out of this one,” Johnson said. – Guardian

George Osborne warned of stiff penalties yesterday unless banks cut bonuses and increase lending. The Chancellor said “nothing is off the table” if they do not comply. His emergency Commons statement to a packed chamber came after reports that the Government had given up trying to curb banks’ estimated £7BILLION bonuses. It was sparked by Barclays chief Bob Diamond, believed to be in line for an £8million payout, telling MPs that neither the Chancellor nor PM had asked him to limit his bonus. The Government appeared to be in disarray as officials refused to say what limits it would allow on bonuses. Mr Osborne said the Treasury is talking to banks about smaller bonuses, greater transparency and a fairer deal to customers. He added: “If the banks cannot commit to that I’ve made it very clear to them that nothing is off the table.” Mr Osborne was forced into his statement by Labour shadow Alan Johnson, who accused him of breaking a coalition vow to bring forward “robust” banking legislation. – The Sun

The coalition was in disarray over bank bonuses last night after Nick Clegg publicly demanded that the Treasury do more to slash sky-high payouts. Chancellor George Osborne responded by reviving a threat to hit the banks with new taxes unless they raise lending by £20billion this year and open their books to publish more details of bonuses. He told MPs ‘nothing is off the table’ if the banks are not more ‘responsible’. Mr Osborne intervened in an apparent attempt to placate Liberal Democrats furious at suggestions that the Government has abandoned hope of slashing the £7billion bonus pot to be paid by the big banks this year. Senior Lib Dems accused Downing Street of ‘waving the white flag’ over bonuses after months of tough talk. – Daily Mail

By-election number two

The Labour MP admitted dishonestly claiming more than £14,000 in taxpayer-funded expenses after being exposed by The Daily Telegraph. He is now expected to become the second MP to be sent to prison when he is sentenced until next month. The MP faces spending up to seven years in prison. However, Illsley will not automatically be banned from the House of Commons unless he is imprisoned for more than 12 months. There was growing pressure for the MP to resign his seat or for the Speaker to intervene to force him out of Parliament. Ed Miliband, the Labour leader, called on the MP to step aside. Illsley was suspended from the Labour Party when he was charged but still sits in Parliament as an independent MP representing Barnsley Central. Mr Miliband said: “Eric Illsley has been found guilty of a very serious charge. He is no longer a Labour MP and I think he should now do the right thing and resign as an MP. I do not think he can be a credible voice for his constituents having pleaded guilty to such a serious offence.” – Daily Telegraph (more…)