Quote:New poll reveals depth of outrage at bankers' bonuses
Three in four think banks are still not properly regulated and want payout cap

Anushka Asthana, policy editor
The Observer, Sunday 21 February 2010

Public outrage at bankers' bonuses is revealed in a poll that finds wide support for a cap on payouts and tighter regulation of financial institutions.

The findings come the day before RBS, now 84% owned by the taxpayer, announces its results, with a rumoured £1.3bn set aside for bonus payments despite an expected £5bn loss before tax. Lloyds, which is 43% state-owned, is expected to announce losses between £3bn and £11bn with a bonus pool of £200m. Last week Barclays revealed that 144,200 staff would pocket bonuses totalling £2.7bn.

A YouGov poll reveals the extent of public anger at City excess. It finds that 76% of people would support a cap on bonuses, that 59% support windfall taxes on bankers' bonuses, and that 60% want the tax to be extended to those working in hedge funds and private equity houses.

There was also support for other forms of regulation, with most supporting a levy on financial transactions (a Tobin tax). Almost seven out of 10 wanted retail and investment banking separated. Three out of four people said they did not think banks had changed and were still not being properly regulated.

"The economic arguments for taming the dominance of the finance sector are overwhelming. The social and moral arguments are incontrovertible," said Neal Lawson, chairman of Compass, the Labour campaign group that commissioned the poll.

It wants strict regulation in the City and is calling on its 30,000 members to bombard Alistair Darling, the chancellor of the exchequer, with emails pledging support for the regulation. The campaign is timed to coincide with the announcements from RBS and Lloyds. The banks' chief executives, Stephen Hester and Eric Daniels are under pressure to forgo their own bonuses as Barclays' John Varley and Bob Diamond did last week.

Meanwhile, HSBC's executive pay committee will meet this week to decide how to deal with shareholder concerns over a proposed hike in salary of up to 40% for chief executive, Michael Geoghegan and the group finance director, Douglas Flint. Investors have told the committee they are outraged by the plans.

Politicians said today's polling showed the true extent of public anger and revealed support for "wholesale reform" of the financial sector. Jon Cruddas, Labour MP for Dagenham, called on the government to bring in the reforms. "It is popular and it is the right thing to do," he said.

Meanwhile, 131 MPs have signed an early-day motion calling for a high pay commission to look at the impact of excessive pay on the economy. It points out that the super-rich have seen their pay increase by 76 times that of the average worker in three decades, and says excessive pay was linked to the crash.

Its primary signatory is John Battle MP, who said recent bonus announcements showed that banks could not regulate themselves. "Distributive justice begins by taming the excessively paid in the financial sector," he said.

Ruth Lea, economic adviser to the Arbuthnot Banking Group, said it was little surprise that the public was unsympathetic to the banks. She said that workers in Redcar in the north-east, where the local steelworks are being mothballed, were furious that so much was spent saving the banks. The "sense of unfairness hits you between the eyes", she added.

But Lea warned that "taxing investment banks out of London" could damage the economy, because the sector generated so much tax revenue.

The industry claims that UK banks are already signed up to some of the tightest international controls on pay and remuneration. Lesley McLeod, of the British Bankers' Association, said: "Banks are committed to staff rewards which encourage long-term success and discourage undue risk-taking. Banking operates across national boundaries and the small number of highly talented staff who attract the highest pay are equally mobile.

"It is therefore necessary for UK banks to offer comparable salaries and benefits if they are to recruit, reward and retain high-calibre staff."