A top Welsh Conservative has been secretly recorded advising bankers to be “innovative” to flout rules that would cap their bumper bonuses. The party’s MEP Kay Swinburne was caught on tape alongside a Tory MP talking to an audience in the City outlining how the Conservatives had opposed new European rules limiting how much bankers can make on top of their salaries.
Speaking to the conference in the City of London, Ms Swinburne, who worked in investment banking before becoming an MEP, told the audience there was no public appetite to revoke the cap and suggested they “get around it” instead. “We’ve had things like bankers bonuses, which was a tiny part of CRD IV (which aims to minimise the negative effects of firms failing by ensuring that the firms hold enough financial resources to cover the risk associated with their business). Nevertheless, it was a very important part for the UK and for other bankers across Europe.”
“I can tell you that there is not a single constituent that we have met that think that it was right to take it to the courts. They think that it was right that there was a bonus cap. So, I think it is up to everyone else to be a little more innovative as to how you get round it, and I’m hearing all sorts of schemes at the minute which do in fact bypass the overall cap- I suspect that there will be a lot of anger about it.”
A spokeswoman for the MEP was quick to say that the comments were taken out of context, as Ms Swinburne was saying she believes there are better ways of dealing with excess in the financial services industry. The cap restricts bonuses to 100% of bankers’ pay or 200% with shareholder approval. The Treasury has argued that the cap will drive talent out of Europe and inflate basic pay, making it harder for banks to trim costs in lean years.
Chancellor George Osbourne had launched a legal fight to overturn the cap – spending £43,000 of taxpayers’ money to fight court battles – before ultimately abandoning the bid last year after a judge rejected ministers’ claims it was illegal. See that story here.
Ms Swinburne, who was born in Ceredigion, was criticised by Labour MP Cathy Jamieson, who said: “The Tories are not only opposing a cap on bank bonuses, they now even seem to be encouraging bankers to find ways to get round it.
“Labour will repeat the tax on bank bonuses and use the money raised to fund a jobs programme for young people. We will also change the rules so that, in cases of wrong-doing, bank bonuses can be clawed back for at least 10 years after they have been paid out.”
Ms Swinburne’s comments were made public on the day that banks began announcing how much bonuses workers will get. HSBC, which has been facing allegations it helped companies avoid tax, released its annual earnings this week including bonuses, while taxpayer-bailed-out RBS follows on Thursday, with Lloyds’ announcement due on Friday.