The Wilted Rose

Charting Labour meltdown 2007-2010

The bonus culture – some solutions from John Redwood

George Osborne has rightly criticised excessive bonuses for bankers in state-bailed-out banks and John Redwood has highlighted some excellent solutions to dealing with these:

1. Many of us find it unacceptable that senior executives working in loss making state controlled business are being paid mega bucks out of our money. Why is Stephen Hester being offered a £9 million package, when there would be someone good out there who would do it for one tenth of that sum and still be well paid?

2. I also agree with George Osborne that someone senior working for a bank not controlled by the government could be offered mega bucks for taking extreme risks, only for the bank to seek a government guarantee or other assistance if they get it wrong. That too must of us find unacceptable.

The easiest way to tackle type One excessive pay is for the government as majority shareholder to refuse to sign contracts containing such payments. They should call in all the top executives of their heavy loss makers, and negotiate a new deal with them, deferring or cancelling bonuses until their banks are genuinely profit making and have provided for or sorted out all the loss making activities these executives have helped build up in recent years. These new contracts should be a condition of taxpayer support. They should be made to pay for what they have done wrong in the past by forgoing the bonuses they think they have earned. They should not be allowed to dump all the unprofitable business on the taxpayer and carry on as if nothing had happened.

Type two excessive bonuses are also best tackled in this way. There should be a general statement of government policy, that if any bank gets into trouble in future and needs taxpayer guarantees or cash, it will automatically trigger a retrospective revision of all senior executive contracts with a view to cost cutting as a contribution to sorting out the bank’s cash and profit problems. The Regulator can go further and say that in cases where they judge that large institutions that could cause damage to the system are offering excessive remuneration for excessive risk, they will require the institutions to carry more capital to undertake such business. Shareholders will then see that their generous remuneration policy imposes a further penalty on them in the form of lower returns on capital and the need to put up more money.

Let’s hope that the Government acts quickly to implement some of these suggestions, rather than continuing with its “bad bonus” rhetoric, without actually doing anything about it. This just proves again that it is Labour that is the “Do Nothing Party”, while the Conservatives would sort out Labour’s city cronies once and for all.

18 August, 2009 Posted by | politics | , , , , , | Leave a comment

Not only the EU, but now the BBC too has forgotten Wales

Some years back the EU notoriously left Wales off a map of the UK. But the London-based BBC is just as bad. Professor Jones-Evans will not be pleased; nor will I, as an Irishman who is also British and therefore a fellow Celt, because I am fed up with the metropolitan elite forgetting about us folk on the ‘fringe’ (except when it comes to the Edinburgh festival, or where they can send their children to university, e.g. Cardiff, Edinburgh, Queen’s).

So the BBC, as I just tweeted, thinks that the Wyre Forest MP Dr Taylor is the only current MP elected as an Independent.

My immediate reaction was, “What about Blaenau Gwent’s Dae Davies? Doesn’t Wales count?”

Doesn’t his 2,488 majority over Labour count? What is worse is that I could understand if the BBC had checked the 2005 election results only (which they clearly haven’t as the late Independent MP Peter Law was elected for the constituency then) and forgotten about the by-election results. They clearly haven’t checked either Wales or Scotland, and wouldn’t even had my home country of Ulster on their radar (after all, it’s not even part of GB).

Excuse me for saying this, but I thought it was the British – not the London or English – Broadcasting Corporation. Clearly not any more.

18 August, 2009 Posted by | politics | , , , , , | 6 Comments