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The Prime Minister today adds his voice to the debate over bankers' bonuses but he risks looking like a follower rather than a leader. The Financial Services Authority chairman Lord Turner last week made the radical suggestion that if increased capital requirements do not stop excessive risk-taking by banks, a special tax might be needed. Gordon Brown is not prepared to go so far.
He supports the process that the FSA has already begun to ensure that banks which run big risks are forced to hold a bigger cushion of capital. This should in principle limit big pay awards for short-term gains that destabilise the banks and should in turn reduce the risk of further taxpayer bailouts. The Prime Minister rightly points out that the UK cannot take action unilaterally. However, he has raised political expectations of action on bankers' pay upon which he will now have to deliver.
If he were to return from this month's G20 meeting in Pittsburgh with a measure of agreement on this issue, that would be a valuable prize. And his French and German counterparts were discussing controls on the size of banks in Berlin yesterday. Mr Brown has great faith in international summitry but amid Pittsburgh's other objectives on matters ranging from global economic imbalances to climate change, it is hard to be confident that he will return with a result on bankers' pay.
That said, there is no doubt that Lord Turner has opened up a useful debate about the value of some of what the City does. As Anthony Hilton points out in our business pages today, many in the City are well aware that they extract more in fees and trading profits than the services are worth. The problem, of course, is in working out how much of this activity represents the necessary matching of companies needing capital with investors and lenders, and how much is a casino run for the benefit of the operators.
The investing institutions which manage our savings and pension funds ought to object to the excessive City fees which damage the performance of the funds they control on our behalf. But there is little sign that they are yet prepared to take a lead. And the danger is that political leaders under pressure to take action against excessive bonuses will draw the line in the wrong place.
Don't waste water
Boris Johnson wants Londoners to spend less time in the shower. That is part of the message of the Mayor's draft water strategy, announced today. Even in this damp island, water is a precious resource threatened by climate change and a growing population. As a result, Mr Johnson wants all London houses to have meters installed by 2015 and all flats to have them by 2020.
The Mayor's scope for action in this area is limited. However, his planning powers do allow him to oblige councils to insist on water meters in new homes as a condition of planning permission. In the meantime, there is much that Londoners can do to limit their use of water, such as running dishwashers and washing machines only when they are full. And the water regulator, Ofwat, should take note of how well water companies are doing in encouraging consumers to install meters when it sets its framework for their profits.
A bright idea
Today the EU ban on incandescent light bulbs comes into force: they are being replaced with low-energy bulbs. Despite the environmental benefits - the switchover will save five million tones of carbon dioxide emissions a year in the UK alone - the ban has sparked much harrumphing. Yet whatever opponents claim, the main reason for their anger appears to be largely sentimental. There's nothing wrong with nostalgia as such. But for light bulbs? Hankering after old-fashioned light bulbs will soon seem as silly as missing British Rail sandwiches. The new bulbs are better: we should embrace them.
Reader views (1)
Gordon brown reminds me of Alan Partridge in that scene where he takes a Corby Trouser press apart in his hotel room for no apparent reason. He then asks reception if they have anyone on hand who knows how to put it back together. Alan is funny and tragic. GB isn't and never will be funny. An absolute loser with no integrity and a broken moral compass that simply points away from reality and the wishes of the British people. I think he will lose his seat at the next election. I've never disliked a prime-minister in this way. Most break a few things. He ruins everything he touches and beyond repair.
- David S., Ealing, 01/09/2009 12:04
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