Guy Jackson
Agence France Press
BRIGHTON, England: British finance minister Alistair Darling promised new laws Monday to crack down on bankers’ bonuses, as the ruling Labor Party fights for survival at next year’s general election. In another attempt to boost the beleaguered party’s fortunes, business minister Peter Mandelson was also expected to announce the extension of a popular car scrappage scheme.
Darling told the ruling party’s conference he would introduce legislation in the next few weeks “to end the reckless culture that puts short-term profits over long-term success.”
“It will mean an end to automatic bank bonuses year after year, it will mean an end to immediate payouts for top management,” he said in a speech in Brighton on England’s south coast.
Any bonuses would have to be spread over a number of years “so they can be clawed back if not warranted by long-term performance,” Darling said.
Bankers’ pursuit of short-term profit has been blamed by many analysts for fueling risky deals which led to the financial crisis.
Darling criticized the party at the weekend for showing a lack of “fire in our bellies” in the face of opinion polls which show it is trailing the opposition Conservatives by up to 15 points, with an election due by June.
But as the first of the party’s ‘big-hitters’ to address the conference, he gave a muted speech which received warm applause but none of the standing ovations that senior ministers can normally expect so close to an election.
With Prime Minister Gordon Brown fending off questions about his health and his leadership style, Darling portrayed him as a voice of reason whom the world acknowledged had led the coordinated global effort to stabilize the economy.
There had been unprecedented action to stabilize the economy, Darling said, and “ministers around the world recognize this would not have happened without Gordon Brown’s leadership.” With Britain’s public finances in a dire state in the wake of the economic slowdown, Darling also previewed Labor plans to introduce a law requiring the budget deficit to be halved by 2014.
The Fiscal Responsibility Act would commit future governments to cutting Britain’s 175 billion pound (188 billion euro, $277 billion) deficit.
But he defended the government’s decision to pump billions into the banking system last year, contrasting Labour’s action with its Conservative opponents’ who had accused it of wasting money by propping up the banks.
“At every stage, the Tories have misunderstood the causes of the crisis. Underestimated its severity. And opposed the measures to limit its impact,” Darling said.
Global action on tax havens had also borne fruit, he said, and the British government had demanded the details of 100,000 offshore accounts under new information-sharing agreements.
This would mean “billions of extra unpaid tax returning to our country,” Darling said, including an estimated one billion pounds from Liechtenstein alone.
Mandelson meanwhile was to announce an extension of Britain’s car scrappage scheme at the conference, media reports said.
The old-for-new scheme helped sales of new cars to rise by 6.0 percent in August, and its extension will likely be welcomed by the auto industry and motorists.
But as Brown prepares to address the conference on Tuesday, the polls gave him little comfort.
A ComRes survey for the Independent newspaper on Monday showed the Conservatives on 38 percent and Labour level with the Liberal Democrats on 23 percent.
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