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Banks face windfall tax

Robert Peston | 16:38 UK time, Sunday, 6 December 2009

The Treasury is preparing to levy a windfall tax or super-tax on British-based banks, which could be announced as soon as Wednesday in the pre-Budget report and would raise considerably more than £1bn a year for two or three years (but see below for an important update, which discloses a refinement in Treasury thinking - such that the tax would be for one year only and would raise several hundred million pounds, or less than £1bn).

It is not 100% certain that such a tax will be announced, because there are formidable practical obstacles.

But if it is imposed, it won't just apply to UK banks such as Barclays, HSBC and Royal Bank of Scotland. The British arms of overseas firms, such as Goldman Sachs, JP Morgan and Deutsche Bank, would also be liable.

However, several ministers and officials have told me that the government is determined to extract revenue from banks for taxpayers and simultaneously prevent the banks from awarding substantial bonuses to their employees.

"It is a matter of justice," said one minister. "Investment banks are making exceptional profits as a result of the intervention of government and the Bank of England to limit the economic damage from the mess caused by those very same banks. So it would be outrageous if they paid those profits to employees and bonuses. We are determined to
prevent that."

One route being considered is to levy a super-tax on bankers who receive bonuses over a certain low level. Another is to massively increase the employers' National Insurance charge on banks that pay big bonuses, or to tax the profits of investment banks directly.

Whatever tax is finally chosen and announced (if any) would not last longer than two or three years.

The Treasury believes that the City of London would not lose massive numbers of employees or business to rival financial centres if a super-tax lasted just a few years.

However, it fears there would be serious damage to Britain's financial services industry if banks or bankers based in the UK were perceived to pay much more tax than those elsewhere.

There are many practical difficulties with imposing a super-tax, not least of which is skirting European Union prohibitions on taxation that discriminates against individual companies.

But probably the biggest obstacle to such a windfall tax or super-tax on the banks is that the Treasury does not want to be extracting precious cash from banks at a time when they need to strengthen themselves by accumulating capital as a buffer against future losses.

"We can't impose a tax that weakens banks capital," said a member of the government. "Anything we do must be neutral in respect of their capital resources."

That said, the banks are more-or-less being coerced by the authorities into paying out their bonuses in shares, because this actually creates capital for banks.

So if there were a super-tax on bonuses awarded in shares, that would not erode banks' capital resources.

Even the Chairman of the Financial Services Authority, Lord Turner, has pointed out that it looks unfair to many that banks are planning to pay out big bonuses on the back for profits that are the exceptional consequence of evasive action taken by the government and the Bank of England to limit the depth of the recession suffered by
the UK.

The argument runs that reckless lending and investing by the banks precipitated the financial crisis of 2007 and 2008 which was an important cause of the recession.

And not only have banks been bailed out by taxpayers to the tune of £850bn - in the form of loans, guarantees, insurance and investment - but they have also seen their profits artificially boosted by the indirect consequences of the slashing of interest rates and the creation of £200bn of new money.

For example, big companies have paid off old debt and taken on new debt to take advantage of the massively reduced interest rates - thus generating big fees for investment banks.

Also, the sharp falls in the dollar and sterling which the Bank of England and US Federal Reserve have engineered to an extent have created massive trading and hedging opportunities for banks.

"The fact is that we have gifted vast profits to the banks as a result of our actions," said a minister. "If they were using those profits simply to strengthen themselves that would be okay. But what we can't accept, and what society can't accept, is that they are using those profits to pay enormous bonuses."

In the longer term, the prime minister and chancellor want a permanent levy on banks transactions, a so-called Tobin tax. However they recognise that it would be devastating for the City if such a tax were imposed unilaterally by the UK, so the Treasury is preparing a paper which it will use as the basis for trying to secure agreement from the
G20 leading economies for such a tax.

Update 2026: Ministers have refined their thinking on the windfall tax. It now looks as though it will be a one-off, lasting no more than a year. And the revenue from it is likely to be a few hundred million pounds - in other words, less than one billion.

And, for the avoidance of doubt, it will be aimed at curbing bonuses deemed to be excessive.


  • Comment number 1.

    Surely it would be easier for the government simply to renegotiate the loans that have been made to RBS, Lloyds etc? In other words pay your bonuses but the banks should also start paying back the bail out money. This seems to be happening in the US, where Bank of America is paying back 40 billion or thereabouts.

    The authorities across the pond appear to have done their homework. But surely taxing Barclays and HSBC is a bit like punishing success?

  • Comment number 2.


    Bash the bankers

    Why dont we also increase tax to 60 or 70% and see our tax revenues plummet as we continue our slow economic decline

    As a nation we have be in relative economic decline since 1870

    The last twenty years or so was just a blip

    We can all continue to head south as before

  • Comment number 3.

  • Comment number 4.

    Robert Preston:

    Thanks, for the excellent information regarding the
    news of the windfall tax story about the British Banks....

    =Dennis Junior=

  • Comment number 5.

    Mr peston is right on cue!

    we are close to an election therefore according to the alaistair campbel / damian mcbride school of the run up to important announcements you should.

    a) Stir up abit of hate for someone (e.g. RBS bankers bonuses etc)
    b) once the public is stoked up suitably get a very populatr policy in place.
    c) leak it to RP first to bump up the expectation / news coverage.
    d) announce it officially.

    we can also expect the following on wednesday.

    1) guess what we have reviewedthe figures and we are already out of arecession as of the last qtr (aka feelgood factor)

    2) Cuts will be announced for big unpopular big ticket items (NHS computer system) while the real long term pain is buried in the small print and in complicated terms so only economics graduates can unravel it.

    3) ridiculously optimistic growth figures will be announced which do not take any acount of the huge spending cuts. The private sector can not fill governments 12 billion plus a month hole.

    An election is as usual i guess for or noble public servants.

  • Comment number 6.

    "The Treasury believes that the City of London would not lose massive numbers of employees or business to rival financial centres if a super tax lasted just a few years."

    "The Treasury believes ..." Well, that's OK then. Mind you, they also believed that banks were being properly regulated between 1997 and 2008. "The City" may not lose "massive" numbers of jobs (a small number is OK because they work for banks and are therefore some kind of untermensch). Jobs will be lost throughout the country as bank cashiers, administrators, cleaners, and the other 99.9% of bank staff who had nothing to do with the current problems, are made redundant to make good the new tax levied. (This in is addition to the jobs already lost.)

    Businesses have very long corporate memories and if this government (or its successor) believes it can use banks as their whipping boy for a couple of years and then revert to being seen as business friendly, they are very much mistaken.

  • Comment number 7.

    All a bit silly really. If the Government taxes the banks we, the taxpayers, own then we are just taxing ourselves. Brilliant!
    If the Government taxes the other banks, that is just punishing success and will discourage the foreign investors who have injected capital into Barclays and others from investing in British companies again.

  • Comment number 8.

    850 Billion, used to bail these banks. Gnerating a few billion for a 3 years seems very logical. Banks shares have continued to increase and so will their profits. Its only right, for the fairness of taxpayer! And if these bankers want to leave then let them, moral banking system is one which we should aspire too.

  • Comment number 9.

    On the face of it, this looks absolutely pathetic. It simply reveals what a terrible mess this Government has got itself into over the banks. 1 billion seem nothing to us tax payers now. Chances are it will be our money that they will be using to pay this anyway.

    It seems to me that the Gov trusted the banks to respond to their kindness of tax payers hard earnt cash and the banks simply took the money with brutal disregard for the society that has provided it.
    Of course, all our MP's are at fault for trying/allowing the Gov to to us tax payers money to maintain the housing market bubble whilst they get re-elected and off-load their second homes and buy-to-lets.

    Its remarkable that the UK and the US are running around the world preaching that democracy is the answer - yet we seem to have such a corrupted (inc MP's expenses), indebted and selfish society.

  • Comment number 10.

    RP - good blog as usual

    A tax on bankers sounds about right to me. These profits are generated by the government and banking infrastucture not by the 'talented' bankers.

    When RBS made a £40bn loss in 2008 I didn't hear that the bankers wanted to all chip in and remortgage their houses so they could share the loss between them as they had all contributed to it. No - that was for the the the taxpayer to do.

    And also its not just RBS that have been supported - all UK clearing banks have been given government guarantees to all their borrowing. A recent research report written about in the FT suggested that banks borrowing costs would increase by £6bn if it were not for the government guarantees. Plus banks with commercial property loans are just rolling over the loan rather than accepting the losses which run into billions.

    I think the bankers all realise the game will soon be up thats why they are so desperate to get their bonuses this year - as this bonus round could be the last!!!

    By the way RP haven't most of the 'profits' been generated through fixed income government bonds trading anyway? - Pls look into this.
    Banks borrow from BofE at 0.5% then buy government bonds with a yield of 3% - crazy - its a free gift from the taxpayer!

    One area I do disagree with you on this blog - that we can only put up these taxes if the whole of G20 do!

    We should put them up anyway - we need to to compensate for the risk that the taxpayer is taking on. Maybe bankers would be forced away but I think that would be a good thing. We'd be left with banks as a utility (payment system, mortgages and deposits) as all the riskier elements leave to lower taxed regions. In my opinion the quicker they go the better!!!!!

  • Comment number 11.

    If this is the case it is sounding like Darling and co are beginning to 'get it'.

    It has become very evident over the last year or so (if it was not already) that the whole of the financial system in this country (and indeed in all western economies) is massively rigged in favour of those who play with money, and that it is basically screwing those of us who make our living from the actual, tangible, products and services that have value in our lives.

    The rigging of our monetary system in favour of the money-dealers amounts to nothing less than a tax on the rest of us. (Why a tax?.... well, I have to use this system if I am to run my business according to the law i.e. I could just use cash on all transactions, and keep the notes under my bed, but I doubt if HMRC would like that much).

    And we've had enough of this. We need to seize this once in a generation to throw the money-changers out of the temple, and get a load of new ones in.

    Whilst a few measures like a windfall tax etc will help in small ways, the changes required in our system should be on a much more biblical scale....

    Limit the size of individual banks (too big to fail really does equal too big, nothing more nothing less) - don't care how you do it
    Split commercial from investment (and don't use the word 'banking' with investment... cos it's not proper banking!)
    Force all businesses who deal only in money or monetary instruments to open up and declare huge amounts more info into the public domain.

    Only then will we begin to get better competition and will the people begin to get a good deal from the money-changers.

  • Comment number 12.

    Yes, a windfall tax on banks. Excellent idea. Let's have it.

  • Comment number 13.

    Excellent, it is long overdue that banks are firmly put into their place and that the 'power of big money' is put where it belongs in societies: banks should serve a just, prosperous and fair society and they should not exploit, abuse and deceive average citizens. Someone has to stop the casino madness which has taken over the global banking system: someone has to regulate the banks, tax them, break them up, control them.
    Please read more about the madness that has taken over the global finacial system:

  • Comment number 14.

    Surely the Bankers will now be incentivised to take even bigger risks to make up what they're losing out on in bonuses after the new tax, especially since they're going to be at 50% tax anyway?!

  • Comment number 15.

    bye bye city good bye
    bye bye city good bye
    dubai city hello
    dubai city hello

  • Comment number 16.

    It is too soon to get excited because...

    1) The tax monies raised may be paltry amounts in the context of a
    goondog trillion £'s in UK national debt

    2) The opportunity is likely to be used for spin politics by Labour

    3) The labour government will waste most if not all of the tax monies levied.

  • Comment number 17.

    This whole situation is being exacerbated by a Government that has run out of ideas and has lost control.

    The best thing he could announce is a General Election and lets get someone making decisions who is going to be around for a while and is not just short term headline making.There appears to be a culture of lets make loads of announcements of what we might do in the hope that one of them looks good enough to try.

  • Comment number 18.

    Whether such a tax is good or bad, right or wrong, all I can say is that by their behaviour the banks have been asking for it.

    No doubt there will be weeping and wailing and gnashing of teeth but this is politically inevitable.

    Either the City comes to heel to serve the UK, or it will have to be brought to heel and forced to serve the UK. The choice lies with the City.

    I have no doubt that Alastair Darling has the strength of mind to see this through, but I have doubts about his boss and many of his advisers.

  • Comment number 19.

    I know some comments on this blog seem to be saying that a tax rate for banks would ruin the economy - I don't believe thats true. We need high tax on banks to compensate for the risk we are taking on!

    The main point I want to make is BANKS ARE DIFFERENT from any other business in that they get government support - the gov didn't save Woolworths, Rover or Farepak did it?!

    If the tax payer had used £117bn of real cash (thats how much HMT have borrowed so far for the bailout - £5k per UK family) to support any other industry we would rightfully be concerned. We can't continue with a banking system that is screwing the country and all taxpayers over!

    Of course some of this talk is populist but its definitely more than that - read Martin Wolf and John Kay in the FT - they have been saying for a long time that there needs to be massive reform.

    One idea I have is that any pay over a certain amount say £60k (3 times UK median wage) cannot be tax deductible for corporation tax - also banks should not be allowed to roll forward/back their losses to decrease the tax they need to pay.

  • Comment number 20.

    Will Darling also anounce that he will enforce the current rules and tax the ACA allowances that MP's claimed that were not wholely and exclusivly used in their role as MP's!

    If not will he tell the house why the inland rev failed to collect due taxes and prosecute MP's

    For example
    A £1645 duck house should have incured either £658 of tax (40% of 1645) and 16.45NI if the MP had correctly declared it or if the employer had paid tax on the pre-tax amount of £2741 the tax due would have been £1096 and 27.41 NI

    The TAX man can take a view and charge either amount + the fines for non decleration and interest for each years non payment.

    And this is ONE example for ONE MP who failed to delaire benefit in kind income under the ACA scheme; others include mock tudor beams, book cases, BBQ sets, heating and power used by faimley members etc

  • Comment number 21.

    The point about the windfall tax is that it is completely and utterly justified by the exceptional way in which banks made their profits (in the profitable bits!) in 2009! As the blog entry puts it:
    ""It is a matter of justice" said one minister. "Investment banks are making exceptional profits as a result of the intervention of government and the Bank of England to limit the economic damage from the mess caused by those very same banks. So it would be outrageous if they paid those profits to employees and bonuses. We are determined to prevent that"."
    ....of course the quid pro quo for this is that such action MUST be extremely temporary. Either the WHT should be limited to 2009 or the rate for 2010 (its final year, in my view) should be reduced to reflect the more normal market circumstances now emerging.

  • Comment number 22.

    Simply a ploy by Labour to steal more money fron the tax payer, misdirecting our anger away from a failed government and on to the despised bankers. From the tax payer you ask? Well who do you think pays all the outrageous charges and overdraft fees while receiving pathetic amounts of interest for our money - money the bankers are using to drive the latest asset bubble?

    Predictable scoop from Preston. Pathetic politics from Labour.

  • Comment number 23.

    How stupid people can be? It seems there is no limit for Comical Ali!

    "Investment banks are making exceptional profits as a result of the intervention of government and the Bank of England to limit the economic damage from the mess caused by those very same banks. So it would be outrageous if they paid those profits to employees and bonuses. We are determined to prevent that".

    First investment banks per se are no more responsible of the mess than retail or commercial banks. The issue was banks with pathetic risk management. The problem is that the like of NR, RBS and HBOS (for the UK!) have been under pricing for years because they did not bother about the risk. Where was the government or the FSA to stop this? Nowhere! They were too happy for people to get cheap loans, always good when you need to be re-elected, without mentioning the huge amount of taxes raised at the time from the banks, did not hear anybody complaining at the time. Comical Ali and Flash Gordon are the real responsible for this mess.

    Second about this idiotic statement that ALL the banks benefited from the government help. True the government/BoE provided liquidity to all the banks but why did they need to provide liquidity? Because the government/FSA allowed some banks running their business without bothering about risk. Some banks, and we know which, had a flawed business model. These are for these banks that everybody is now paying.

    And despite all the hysterical noise about banks a lot of them act as lender of last resort for businesses. They provide liquidity to the business when needed. Obviously they look at the business model for each case, they will not lend money for companies going into the wall but they will lend money for company with a good business model but lack of liquidity due the economic environment. The same happens for the banks, some had a flawed business model, some not.

    Bagging all of them together is a sign of stupidity and desperation from the government. They are obviously out of their depth and scapegoats are always very helpful to deflect the blame.

    Banks do not worry me, stupidity does!

  • Comment number 24.

    a slightly different form of this story was going around City on Friday but good to see somebody finally report it. Thank you Robert.

    i work for an investment bank (which was not bailed out by UK govt). and, yes, if a super tax is announced then i will leave the UK, along with most of the people i work with. it's unfashionable to admit, but there are plenty of jobs in dubai, HK, etc. or i could move to lower tax destination like France (2 hrs away). or many european countries (eg NL, switz) have attractive tax regimes. don't kid yourselves that high net worth individuals aren't mobile. they are.

    before you get too excited about my lot leaving pls bear in mind that my bank was never bailed out by UK govt, but we paid a huge amount in tax. relocation means you're driving out firms and individuals that did nothing wrong.

    good luck paying down the debt. i suggest you all put your assets in something non-sterling. going to zero.

    thanks for all the fish.

  • Comment number 25.

    Society should not accept bankers paying themselves huge bonuses whilst hundreds of thousands of people languish on the dole queues as a result of their collective folly and Gov't failure to regulate effectively.

    If I were PM I'de tax every bank employee at 100% over £200,000 income...not for 2 or 3 years but until every person who has lost their job .....and we are talking hundreds of thousands............have found employment once again........this may take 5 to 10 years.

    Every penny of the bankers tax should go directly to the unemployed and their families to help them with their financial struggle or to get them back into work with training or self-employment........a kind of socioeconomic reparation from the banks and the banks fat cat employees to the people whose lives they have damaged.

    Brown and his bankrupt regime will also get their just desserts for their part in thsi debacle within the next 6 months at the ballot box.

    If the bankers don't like it or can't live off £200K pa then tell them to take a running jump to whereever they want! There are plenty of unemployed people ready to take their places one way or another!

    The quicker the banks lend the quicker the recovery, the quicker unemployment comes down and the quicker the bankers can get their hands on the dough!

    This is only natural justice.

  • Comment number 26.

    It's fairly simple isn't it? It turns out that an unwritten insurance scheme was in place, provided by the British taxpayers and in favour of banks if they encountered rough times, for which the insurance premium was, er, zero.

    We just need to figure out what the insurance premium needs to be going forward, and levy it. Banks could choose whether or not to pay the premiums, and their investors would make decisions on where to put their money based on the security of the insurance theit bank has or has not bought. If the premiums mean that not enough profit is left in the banks to pay ridiculous salaries, it's probably a sign that the size of the premiums is about right.

  • Comment number 27.

    This government is desperate to continue destroying the banks in a pathetic attempt to save its self. How GB has the audacity to ask for five more years is beyond comprehension.

    This is the most short sighted series of events I have ever witnessed.

    US: Bank of America, arguably the 2nd worst case after Citi, was loaned $45bn by the US Government. It was allowed to start sorting itself out without the interference of the US govenment. BoA is repaying the $45bn this week. NET RESULT - the US government has profited by a net $4bn once repaid.

    UK: BY contrast, Brown, desperate to win some votes by banker-bashing, says no to RBS bonuses. Now i know this is politically unpalatablee, but GB has just p1ssed away £50bn, thats £2k per household in the UK - just for the sake of some short term PR. The RBS bankers are leaving in droves. Well that might please some of the the totally ignorant, brainless idiots that post on this website, but that is not how I - as a UK taxpayer - want my investment in RBS managed. Guess what will happen... all the revenue generating people will leave RBS and we will lose money.

    Go and look at some other companies who's key assets leave the building every evening (think estate agents, solicitors, advertisign agencies) - and ask yourself how much of revenues they pay in staff compensation.
    Not paying people will result in a loss for the tax payer. You flat earthers who disagree are simply ignorant. And No i dont work for RBS.

    Which brings me onto point 2)
    Brown and Cameron are complicit in thier denial of the reasons for this crisis. Yes bankers supplied the credit, but the politicans, wanting to allow everyone to think they are rich have always allowed people to borrow too much - they do not want to blame the consumers (voters) for spending too much in the first place. That nice car in the driveway you cant afford? That sunny foreign holiday that you spent too much on? Look at yourselves as the reason for this.

    We need politicans that tell the truth about their own culpability in this crisis, not mis-direct the blame onto faceless bankers.

    The damage to the City, arguably the only thing in this country that generates exports is a disgrace.

  • Comment number 28.

    There is an awful lot of pussyfooting around at the moment.
    Nobody wants to grasp the nettle.
    And of course it is a big prickly nettle, with stings too.
    What is the difference between Cadbury's and Corus?
    5 years perhaps?
    How so?
    Look at Corus, Teesside. All its raw materials imported. A nice bit of high tech equipment used at Redcar to turn out high grade steel.
    Then look at Cadbury's. Most, if not all its raw materials imported.
    Spotted a trend here?
    Both companies soon to be foreign owned. Soon to be shut down?

    Why is Redcar uneconomic? Costs too high. Why?
    Simple. The workers have priced themselves out of the market. Why though? They would argue they work just as hard as the competition. Ah but their wages don't go as far as the Singaporeans or Chinese wages. Why? Because the UK is having to support the City of London that's why.
    Steelworkers wages have to pay for bankers too.

    Bankers sitting in nice clean offices might well have a low carbon footprint for the millions they make. But they do it on the back of Cadbury's and Corus workers.

    The bankers are set to dispense with Corus workers. Cadbury's next.

    Wouldn't it be simpler to grasp the nettle and dispense with the bankers?
    Eventually the bankers will have nobody else to dispense of.
    Will nobody grasp the nettle?

    Nope. I suspect we will have a sham of taxes and loopholes instead.
    Who's next after Cadbury's?

  • Comment number 29.

    Imposing a special extra tax on bankers, with the justification that the money has arguably come indirectly from the government, is an absolutely brilliant idea. Presumably there's no question of principle involved in singling out one group of taxpayers for extra punishment, no human rights angle, no timid bleating about the rule of law ? For it points the way to the solution of the UK's biggest financial problem - not a few dodgy banks, where the ultimate taxpayer costs will be well under a couple of hundred billion at most, but the gargantuan bill for public sector pensions, already well over a trillion and heading north from there every day. Slap a 75% tax on public sector pensions and the UK's fiscal train wreck is neatly avoided. Seems fair enough, after all public employees get their money unarguably and directly from the government, so they would seem to be even more bang to rights than the bankers. Quangos like the BBC that get their money from taxpayers would be covered by the same rule, obviously. OK Robert ?

  • Comment number 30.

    #24 beelzebub

    You say you work for an investment bank so what exactly do you invest in?

    For example - do you invest in start-ups or early stage companies and how much has your investment bank invested in university spin-outs?

  • Comment number 31.

    I agree with comments about this nasty vote-catching strategy: government whips up public hatred for the banks; government announces punishment on banks when they are successful. Great! Punish successful businesses.

    But it still comes back to a deceitful government and fundamental problems the public seem unable to suss: Brown, who ineptly robbed the B of E of its responsibilities that it had successfully discharged hitherto; Brown who turned a blind eye to poor regulation while still taking a huge tax take from the banks and those bonuses (at 40%) about which he is getting the public to hate; Brown's ineptitude with the economy, promoting a huge property price bubble as part of his damaging credit expansion policy; Brown who in fact rode to parnassus on people's increasing indebtedness; Brown who caned banks for frivolous lending while demanding they lend more during the riskiest times.

    And he's going to get away with it all.

    Why has he singled out the banks? Doesn't he realise he is in danger of driving away our last profit-making industry that isn't foreign owned?

    Were I HSBC or Barclays, the message I get is "If you're determined to be successful as well as prudent, the British government is going to punish you. Go somewhere else."

    Why doesn't he just go.

  • Comment number 32.

    It is about as good a solution as you can get to tax bonuses of bankers in banks who received Government bail outs at a punitive rate. This way Alistair Darling can avoid messy interference in setting individual bankers pay, banks who did not receive a bail out can pay their staff as they wish, the taxpayer gets income and importantly some retribution (for retribution is still needed in spades and the financial services community just hasn't understood this). I'd say tax the entire value at 70% of bonuses in scope - all the bonus, whether shares, cash or other.

  • Comment number 33.

    This latest news, if proved true, will be another blow to the UK's financial services. We need to praise this sector for doing so well under such difficult circumstances! We should be learn to applaud it for turning around their fortunes so quickly!

    Such a tax would be populist and may do long term harm to an industry that is so mobile. Additionally we mustn't forget that much of the profit from UK based banks come from overseas.

  • Comment number 34.

    And for the bank bashing idiots posting here remember tax is a cost for the banks and it will be priced, tax the banks more and you will tax yourselves!

  • Comment number 35.

    Fred G @ 27

    RBS won't be damaged if they don't pay inappropriate big ticket bonuses.

    City propaganda.

    Don't fall for it.

  • Comment number 36.

    #30 Wee-Scamp

    University spinouts are nothing to write home about.
    I know of several that are nothing more than the means to extract government grant money. Also of course investment companies get tax breaks along the way.
    Even better to mention renewables, tick some more boxes - get more grants.
    And of course the holy grail: claim to create jobs in a closure area. Get funded for as long as you like.

    If that is to be the name of the game then let everybody join in. Not just universities.

  • Comment number 37.

    Blaming the Bankers for this crisis is like Fat people blaming fast food restuarants for getting poeple fat.

    Wall Street and the City created cheap loans (tasty burgers), the consumers gorged on them. Politicans did nothing to reign in the consumers in their debt fuelled party.

    AS for the tax - weve had enough. A lot have left already, many many more are considering their options. Before you cheer, think about the long term implications of this tax and the UKs competitiveness. This is a re-run of the great brain drain of the 1970s. We never fully recovered from that. Well done Brown, you criminally irresponible idiot.

  • Comment number 38.

    #30. you obviously have no idea what a bank does.

    banks provide debt financing, not equity financing so they rarely invest directly in companies. investment banks provide advice on financing, and strategic issues, helps your pension fund manager buy shares so you can retire one day, etc.

    so do we invest in start-ups and university spin-outs? no, but we provide some funds for these businesses (without becoming shareholders) and we help them find investors.

    is that clear? otherwise i suggest googling a few basic terms like 'debt' and 'equity' and 'bank'.

  • Comment number 39.

    Go after the toffs, not me! Everything is coming together nicely. Anyone who needs £1m a year to feel secure is a social weirdo, and we should tax them heck out them. If they leave, rejoice; because if we carried on as we are, communism would make a comeback. Good riddance to bad rubbish, as we say up north.

  • Comment number 40.

    Nice analysis from RP as usual. In this case a 'windfall tax' is entirely justified. Someone above referred to the "success" of the banks this year. This is entirely down to the taxpayer support and articially low interest rates put in place in response to the crisis. Not to anything else. Whatever "success" there is in stablising the banks was the Treasury's and the BoE's. It therefore makes economic and political sense for this to accrue to its rightful owners. As to 'fears' of an exodus of bankers I would say two things: 1) it would be good if there were more entrepreneurs risking their own (rather than the taxpayer's) capital and 2) it is all nonsense anyway. I know many bankers and not one has left voluntarily. We heard that all the foreign bankers were going to leave when non-dom tax status was tightened. And Zac Goldsmith and all the others are still here. It will be the same this time. None of them will leave, but they might just end of with less of a sense of entitlement to 'bonuses' when they are not merited.

  • Comment number 41.

    #37 fred goodwin

    If we had a brain drain then perhaps those left might be able to spell rein.

  • Comment number 42.

    Fred @ 37

    "Blaming the Bankers for this crisis is like Fat people blaming fast food restuarants for getting poeple fat"

    Facile and inappropriate analogy ... one of the classic signs of someone who thinks they understand something.

  • Comment number 43.

    #35 - you do not understand the city my friend. The company is toast - all profitbale parts of the investment bank will sufffer as the key bankers, traders and sales people will be leaving. I can guarantee that. that will cost us the tax payer dear. And dont go and confuse the retail bank with the investment bankinig side.

  • Comment number 44.

    #37. wow, you're really focusing on the core of this debate.

  • Comment number 45.

    Perhaps I'm being naive, but why not a tax on the 'bonus pool', at, say, 50% upwards on pools greater than £x? This avoids the taxpayer as owner paying the tax and is likely to discourage bonuses in future. Of course this would affect lower grade bank staff too, but they too should remember that without the bail-outs they'd have no job at all.

  • Comment number 46.

    I am so very glad that you are back, Robert Peston,and I trust your difficulties are sorted for you.

  • Comment number 47.


    We are in this mess because of the greddy society we are leaving in,the greedy people thinking it was their right to own a house, the greedy the people thinking it was their right to have a flashy car, the greedy people thinking it was their right to have the lastest plasma TV. You have the right if you can pay for it!
    The government encourage and supported this greed by telling these people not only it was their right but they did not even need to have the money, they could just live on credit. This is why we are in this mess. Full stop!

  • Comment number 48.


    Couldn't the country manage without most of the services that these people provide ?

    How do other nations manage without armies of bankers ? You know, the countries that manufacture our cars and computers, how to they get along without such a large finance sector ?

    My impression is that a high proportion of transactions are not for real goods and services.

  • Comment number 49.

    Bank employees already face a 55% tax on their annual earnings over £150k. Made up of 40% income tax, and both employee's and employer's National Insurance contributions (net of SERP contributions). Next year (2010-11), that combined tax rate is already set to rise to 65%.
    If they're not paid that money income it'll add to Bank profits on which 28% Corporation Taxes will be due in the current year. And a bit more than that for dividend earners with taxable earnings over £40k pa. But still a lot less then employee tax rates.
    It's therefore a no-brainer that paying bonuses yields lots more taxes than not.
    It's equally sensible to raise Banks' marginal Corporation Tax rates to 65%.

  • Comment number 50.

    Fred @ 43

    "And don't go and confuse the retail bank with the investment banking side"

    I wouldn't dream of it.

  • Comment number 51.

    Smokescreen successfully created as bashing the banks or the climate sceptics stops scrutiny of how the government got us into this mess in the first place in the crunch.

    Also, how it mismanaged the bailouts which led to the current bankers bonuses debacle happened. Did they honestly think that an investment bank would not make profit?

    The current flurry of activity is only happening because of government miscalculation - the tax take is going badly into the red, gilts are not selling so having enough money to carry on will mean that more tax must be paid.

    So, climate change is a great hope for the treasury as it will create revenue by taxing use of energy and by having carbon trading too. The next bubble...

  • Comment number 52.

    Dark Surfer @ 47

    "This is why we are in this mess. Full stop!"

    No - a comma is what you need.

    And after the comma you should go on to mention the global East West trade imbalance, lax monetary policy from the Fed, US sub prime lending, the securitisation of such into bonds, the false rating of those bonds and their (mis)selling in Big Size on to balance sheets all across the developed world. Probably missed a couple of things. More than probably. Oh yes and fraud too - plenty of it.

    Invoice in the post.

  • Comment number 53.

    Tax gambling (i.e. investment banking) a lot more - absolutely ... for any Government and society, with any values/morals at all, taxing gambling heavily is a 'no brainer'.

    What still makes this story more spin than substance however is that the Government is STILL avoiding the key issue ...

    ... We must NOT allow investment bankers to gamble with taxpayers and hard-working people's savings! ie. investment banking needs to be separated from retail/commercial banking (as well as being taxed more) so they can be allowed to fail when their gambles go wrong ...

    ... We need a new Glass-Steagall type act introduced again, similar to the one brought in after the last great depression ... which the current set of clowns (with 'no brains' and/or 'no morals') in their 'wisdom' took it upon themselves to remove!

    Keep up the pressure and can you challenge them on this please too Robert.

  • Comment number 54.

    How about overtaxing all other sectors that benefited from any sort of government incentive? Such as car sector (car scrappage), retail sector (VAT reduction), everyone (lower interest rate), etc. Where do you stop? The government took action to save its own economy, not just banks. The City is that heart of the UK economy - so don't kick it just as it's recovering.

    There's talk here of the 'bankers leaving' - well, they don't have to leave - the jobs will! They can stay and do something else which will pay them less and provide no bonus (this is a sin nowadays - how dare one embrace capitalism) and clearly overall this is bad for the UK.

  • Comment number 55.

    Lets hope this is more than hot air and is sanctioned within a few weeks. We need to find other ways to make our economy thrive without turning everybody into debt slaves in a massive legal ponzi scheme.

  • Comment number 56.

    Banks will continue to make the same post tax profits and pay the same bonuses one way or another......

    ..... why ot cut out the middleman an take it straight from my pension or interest!

    Why not come up with a scheme that incentivises the Investment Bankers to add more of the profits to the pot they are investing... ie pensions and savings!

    Might just repair some of the damamge done over the past few years

  • Comment number 57.

    Jose @ 54

    "Where do you stop?"

    You stop with the banks.

    It's a particular measure for a particular industry.

  • Comment number 58.

    Update 2026:

    Pathetic, talking the talk, but never ever walking the walk, grow some man!.

  • Comment number 59.

    good work RP,

    The update at 2026 to be honest is not too surprising. The principles of not paying excessive bonuses for good results based on environmental factors, ie interest rates at.5% and £200bn of new cash, together with the principle of not using the tax payers bail out to make fat cats fatter are obviously strong ones. Although not popular, its probably 99%+ of bank workers who can't really be blamed for the credit crisis, so other than negative reasons such as spite, should they really be taxed at different rates to others who also earn the same sums of money?.

    I was almost shocked at the following: "When all taxes are taken into account - income tax, national insurance, VAT, excise duties, council tax etc - the richest households pay a smaller share of their income in tax than the poorest households. The overall tax rate for the richest 10% is 34%; for the poorest 10% it is 46%" Surely one of the more equitable ways to pay of the increase in the national debt would be to make a very sizable increase in tax rates for the richest 10% generally

  • Comment number 60.

    Post 51 (Naomimuse) wrote:

    "Smokescreen successfully created as bashing the banks or the climate sceptics stops scrutiny of how the government got us into this mess in the first place in the crunch ... climate change is a great hope for the treasury as it will create revenue by taxing use of energy and by having carbon trading too. The next bubble...


    I couldn't agree more - e.g re-enforces your assertion.

  • Comment number 61.

    So many points to make, so little time...

    We all know that modern empowered politicians are self centred, so yes this is a vote raising excercise.

    1) While BoA is repaying the US govt, I don't see any noise that RBS is doing likewise...

    2) The bonuses are roughly 25% of the profit. The employees who made these deals, which seem fairly straightforwards, really deeply feel that they should get 25% of the fee charged, plus a large salary? This sounds to me like the bank is overcharging their customers, (your pension etc) about 12-15% too much. 10% commission should be more than adequate. Who pays for this extra charge? I guess we do in what we buy and consume.

    3) Yes we all contributed to the crash. However it's pretty clear that the majority of the population are not deep thinkers, and follow the opinion of the media, who encouraged everybody to spend, for the benefit of the larger corporations. In this area, the Govt are responsible, as we entrust them with the smooth long term running of the country, and they failed to protect us, the populace from these temptations.

    4)The banks however encouraged people to borrow, and have a monopoly on money. When things went wrong, all the country suffered in one way of another. The ferengi at the top of the banking structure, however have not suffered. No loss of income, no loss of jobs. This creates great resentment, and they continually demonstrate that they believe themselves to be god like, and we should be grateful for their precence in this country. This is plain not right and needs to be curtailed.

    5) It is going to take a very long time to recover. We have a golden opportunity to re-organise things to benefit the long term benefit of this country, rather than short term city profits. I don't see that a dominant financial sector has a place here: A good sector, but not a dominant one.

    6)60 million people is a tremendous market, and there will be plenty of corporates gagging to get a piece of that market, no matter what the entry fees are. We really need to start thinking that we as a country and people are more important and stronger than any one set of corporate beings.

    7) If we need to threaten them with a tax, in order for them to take notice of us, then so be it. They need to listen and give, not just take.

    Run out of time, bye!

  • Comment number 62.

    "Update 2026: Ministers have refined their thinking on the windfall tax. It now looks as though it will be a one-off, lasting no more than a year. And the revenue from it is likely to be a few hundred million pounds - in other words, less than one billion."

    So this was never meant to amount to that much anyway. And in this instance such talk of windfall taxes and the like was only meant to a be a vote-winning headline grabber? Didn't expect it to be anything else really, just a bit too obvious though, even for a politician.

    What did interest me in the Andrew Marr interview was the sense that Bankers losing billions will be paid for by.....Civil Service employees losing their jobs? (Well, I always said those Civil servants were jolly decent sorts. Are they really sure they don't mind though?)

    With a bit of luck those politicians, that let all of this (regulatory dysfunction) happen on their "watch," will be voted out and shown the door pronto. That level of incompetence just cannot be rewarded! It's the next best thing to going to war and having no Plan A, B or C for dealing with the peace, following victory. I mean that sort of thing just couldn't ever happen so why allow bankers to do their own thing on the grounds that the tax receipts were looking good to start with?

    And to have, as the (only) "credible" cure for our predicament, more of the same medicine, i.e reflating the asset-bubble with debt shows how this whole banking/business edifice is just insane! And we still use phrases like "talented people" and "banker" in the same sentence to describe where we have pinned our future hopes. Hollow, absolutely hollow.

    No, it would not surprise me if this turned out to be the dry-land equivalent of The Titanic going down. Yes it probably did look quite normal - lights still on, engine running - immediately after the collision. QE and bailout, nows seems like the equivalent of closing the bulkhead doors as well.

    The idea of a load of RBS bankers running off to Gollom Sachs is hardly something to be that scared of. It's pathetic.

    One small thing that interests me, is if we will still be using terminiology, like "talented people" to describe investment bankers in a few years time? (I've seen more talent, in talent show rejects!)

  • Comment number 63.

    Labour's scorched earth policy continues apace. I continue to hope that Cameron calls the ultimate bluff and throws away the election so that Labour are destroyed forever.

  • Comment number 64.

    I can't help thinking that with: a bunch of clapped-out Labour politicians running big businesses, like RBS; using great heaps of tax-payers money to prop them up; deciding wage-policy at those businesses with an eye on the headlines and an upcoming election - we are returning to the days of British Leyland.

    Labour screw up everything they touch - we pay for it. Never again.

    Call an election.

  • Comment number 65.

    #38 beelzebub

    I know exactly what a bank does thanks which is why I asked the question. In fact I asked the same question regarding investment in start-ups et al of a certain bank CEO about five years ago. He said that it wasn't part of their strategy. When I asked him why that was the case he couldn't answer me.

    So tell me..... Why isn't it part of what banks do? What prevents it?

    But if you don't want to do it what's to prevent you providing some funds to others to let them do it?

    We should be investing £500m or more annually in start-ups and early stage companies.... Why wouldn't the banks provide most of that?

  • Comment number 66.

    It appears to me that the only way bankers make profits is by extorting money from the rest of the population -- they make nothing else -- so surely all bonuses only reflect their employees success in carrying out this extortion.
    Why should we bribe them to rob us?

  • Comment number 67.

    The banks should be forced to pay back their debt to the tax payer before rewarding their greedy selves for doing nothing other than relying on the tax payer to bail them out of a disaster engineered by their own greed. As said by so many about so few, they are just reinflating the balloon and lining their own pockets at the expence of us. The genious bankers are back, did they ever go away ?, unfortunatly no, we are still at the mercy of the spiv banksters, god help us all.

  • Comment number 68.

    I am continually disappointed by the inability to connect dots.

    Government policy is at the root of most of this mess.

    Let me give you an example.

    The Government's Decent Homes Initiative.

    This initiative prompted large numbers of housing stock transfers to Registered Social Landlords - Housing Associations.

    At the end of 2007 housing association private finance facilities amounted to £43.5 billion pounds.

    Primary lenders were RBS, HBOS, Bradford and Bingley, Abbey, Barclays, Nationwide.

    Dunfermline Building Society (rescued by the government) lent Housing Associations nearly 650,000,000.

    RBS and HBOS lent 725,000,000 to Glasgow Housing Association alone (see

    Ang guess what in 2001 one Gordon Brown promised to write off Glasgow's 900,000,000 housing debt. (see

    And what pays most of the rent in Glasgow? Yes Housing Benefit - provided from general taxation.

    And look at this which lets you know where RBS is lending money right now.

    And here is another article about RBS providing two thirds of the funding for another housing association scheme with other money coming from government (borrowing)

    Another example would be the

    Prescott plan to build 200,000 new homes in the south east

    Builders scrambling for land borrowing to buy it.

    Then there's the PPP schemes

    Where did the money come from for all that infrastructure.

    Yes, the British Banks. Yes HBOS, RBS. That's why they were saved. We were on the hook anyway.

  • Comment number 69.

    That is just so pathetic. Profitable banks will probably move their country of domicile and talented bankers (believe it or not, they do exist ...) will go work elsewhere. Don't forget ... most of them are foreigners.
    Actually, why don't we then take the cash the govt will make out of this and drop fivers from a helicopter over deprived areas? Why not drop also pieces of pinstriped banker suits with said fivers? Sounds like an election is coming?

  • Comment number 70.

    This is all a bit mystifying to me for a number of reasons?

    If someone is registered as a UK taxpayer, ALL income will be taxed at their relevant rate - at the highest rate this is 40% so how much more can be squeezed out?

    Secondly this is a tacit admission by HMG that one of the effects of QE has been to line the pockets of investment bankers - hardly something that could not have been forseen.

    I'm not particularly sympathetic to the mega earners but this type of windfall worries me - what happens if next year the government decides that plumbers, electricians, doctors, solicitors etc etc earn too much and have a windfall tax on their profits? The last windfall tax on the UK oil industry did a huge amount of harm because it dissuaded them from investing in the UK oil fields to squeeze extra life out of them and we still NEED banks and financial system for a healthy economy.

    I would prefer a government that balances it books through rational fiscal and taxation policy instead of pandering to populist measures that may have a short term benefit but long term disasterous consequences.

    Disclaimer - I am not a banker but I am a plumber. Dont hold it against me!

  • Comment number 71.

    This isn't the most intelligent solution.
    The UK's (if not the world's) most successful bank, at present, will just move it's head office overseas (& hence pay far less tax in the UK in the future).
    They have already transferred their CEO overseas to state their disapproval to the treatment they have received from the UK government (they have not relied on the UK taxpayer, nor used the government's asset scheme - unlike many of the other UK banks).

  • Comment number 72.

    and dot dot dot

    and since most ofthelending to government sponsored intiatives was probably supported by wholesale lending its hardly surprising the if there was any regulation it was light touch

    sort of... we'll leave you alone just find the money

    and dot dot dot the banking sector provided 68bn to the inland revenue in the peak years and now they want a windfall tax

  • Comment number 73.

    I'd tax all bank bonuses over £1500 in value at 95% with no defined time limit. Too many people have been hurt by this, and the bankers don't get it - if they did there would have not been a single banker looking for a penny until this mess had been sorted.

    The bare-faced cheek of these people is staggering, though not surprising given the behaviour (and ability) of the likes of Fred Goodwin. We have too many debt-laden graduates out of work, too many householders out of work, too many small companies being fobbed off and left high and dry, for this too go on.

    I'd also bring in a requirement for professional examinations for the banking industry and a business body as powerful as the British Medical Association - gamblers get struck off the register. If you need to be registered to look after kids, then you need to be registered professionally and monitored stringently if you are looking after money too.

    I'd tax the max out of all profits the banks make too. Too big to fail?

    Make them smaller and keep it that way.

    We need out money back. One way or another.

  • Comment number 74.

    and today dot dot dot

    I saw a 'Play Development Officer' with a 'Play Development Officer's van which had the local council's logo emblazoned on the side standing around in a playground watching parents play with their children.

    I wondered who paid the fee for the vetting of the Play Development Officer who appear to be fiddling with a mobile phone and who provided the lease financing for said van and how many people needed to be taxed for this totalitarian nonsense.

    Never mind, a windfall to the rescue.

  • Comment number 75.

    Nulab at its worst. Throw up a headline grabbing measure, back down over the next few weeks, kick into long grass, eventual proposal so weak as to be a joke. eg MP's expenses scandal - this will turn out to be a token gesture when finally implemented.

    Banks too big to fail - should never have been allowed to be so big, solution - break them up.

    HBOS - should have been allowed to fail. HBOS savers should have been protected by government. Government should have been honest about BOE loans to HBOS. HBOS shareholders should have lost all. Good and reasonably good HBOS loan book split between other banks. Bad HBOS loans taken over by Government, not necessarily a disaster as the properties repossessed could have been offered to councils for rental.

    Don't agree with this "talent" rubbish. Its the same excuse for closing board positions to incumbents of the system. Fred Goodwin etc qualifications? acumen? no, simply connections. Directors of companies are like members of a local golf club - if your face fits and you are one of "them" and they feel comfortable with you, you can become a member - if not try the local WMC. There are plenty of talented and very clever people who are not bankers. In fact I reckon that some investment bankers etc are one pan short of a set. Practically anyone could make money in a rising market where there are mega-mergers taking place at the rates banks charge! (I am available to take on the challenge if one of the investment banks doubts my assertion)

  • Comment number 76.

    #70 EmKay

    Well, with so many people who continually voted for Thatcher and her ilk, Labour joined in to gain power.

    What is the alternative? The slums seen in Rio and Nairobi? Before you answer, take a look at the BBC A History of Scotland programme shown tonight and available on IPlayer. At around 40 minutes you'll see some footage of homes poor people lived in, here in the UK. I know. One of those streets looks like it is the one where my parents lived - he was a plumber - and where my brother was born.

    When this country decided that social governments with a more equal society weren't what they wanted, did they actually think about who would profit with unrelenting captialism? Of course not.

    As long as we live in such an unequal society, people who are unemployed or in low-wage jobs need housing benefit if they are to eat. I wonder how many of those bank tellers have to claim housing benefit? Could you bring up a family on £12 000 a year without housing benefit? I don't think so.

    Or would you suggest a tent to save the high earners, who sneer at shop assistants, school dinner ladies etc, paying taxes?

    This government came up with policies it knew would get it elected. Don't just point the finger at politicians - point the finger at the people of this country who got what they wanted and voted for.

  • Comment number 77.

    What a senseless, marginal, and poisonous little side-show...considering all the other difficulties the Treasury and Economy are facing you'd think that Mr T Scholar et al could devote and be directed to devote their energies elsewhere.

    Even if it's only to take a walk in St James' Park !

    Bread and Circus horribly incompetent elites. Perhaps including the BBC, Mr Peston ?

  • Comment number 78.

    Banks are making bumper profits as a side effect of the massive systemic help that has been given to the banking industry. All banks ,not just those that received direct help, exist today because of this systemic help, had it not taken place ,at enormous cost to the tax payer, then no bank would have been left standing.

    It was correct to support the banking sector when they decided to blow themselves up (2000-2008), however it is also correct that bankers should not personally profit from the carnage they caused in the first place.

    My only question is why is this only proposed to be a temporary "super-tax" on bonuses. Is there any case for not making it permanent ?.

    Given the welcome bankers would receive in Europe and the USA ,bankers threats to leave the country are laughable. Where would they go ?, Dubai perhaps ?, oops no that's just blown up also. So it looks like they are stuck here.

  • Comment number 79.

    Everyone I know in the city has had their salary significantly increased in the last year, specifically so less of their remuneration will be through a bonus. This is in anticipation of a retaliatory 'tax' on bonuses. The result is, as ever, the banks are a step ahead of the politicians.

    I think the solution is what I proposed in #26 above - anyone have an opinion on the sanity if the insurance scheme I'm proposing?

  • Comment number 80.

    #65 wee-scamp.

    there are over 500 banks in the City and 1000s of other types of investors. some specialise in start-ups, some don't. call it a division of labour. given the risk profile of start-ups equity financing is probably the best way to fund these, but some (not all) banks still provide funds.

    in principle i agree in investing in start-ups and early stage companies, but given the UK is totally stuffed this is probably the last economy in which i'd put any money to work. but a fool and his money, etc.

    BTW... "a certain bank CEO"... how vague do you want to be...?

  • Comment number 81.

    If this Windfall Tax is viewed as unfair to Bankers, could we consider a UK-wide Idiots tax instead of a Windfall Tax?
    I mean to say, "whoopsadaisy, we made a mistake and the entire world is now in recession" surely would qualify.

    To be more fair, this could be taken across all walks of life, say bus drivers who follow other identical buses around all day, and pick up very few passengers?

    Some may I suggest a suitable penalty for the casino bankers is penal servitude with hard labour for life, but I believe a slap on the wrist and a strict "don't do it again" may well stop repeat occurrences.

    Since this banking crisis seems to be systemic with capitalism, has anyone looked for alternatives? After all, communism is looking relatively better when viewed as alternative to constant boom and bust.

    But I suppose we would just end up with another abysmal form of apparatchik lording it over us, stealing the wealth of their poorer countrymen?

  • Comment number 82.

    A windfall tax, like a super tax on bonuses, will ruffle feathers - but how else can ALL those who will try and wring more cash out of the system be caught/stopped? On paper, certain banking sectors have made a profit - so its snouts back in, as far as these departments are concerned. Regardless of the fact the business as a whole is in hock up to its eyebrows.

    Its a bad joke - The board of RBS claim "market forces" when talking of their own pay rates and bonuses - OK - fair enough BUT if they had been left to market forces in the last 12 months, surely RBS/HBOS would now be closed - with NO Money for any of them other than Redundancy payments from the Insolvency Service at legal minimums.......these banks, as corporate entities, were a few hours from closing their doors - and their ATM's - and ceasing to trade.....where where the cries of "leave us to the market" then - or are their beloved market forces only relevant on the upside ??

    In reply to the "value for money, are they worth it, it's the going rate", banking bonus question - the fact is there is very little one person can do that justifies a six or seven figure payment......they rely on admin staff, HR and logistics that sit below them in the banking system, none of whom get these "glamour" payments. Yet - without the infrastructure, they could not function.

    They have no humility.

    The bailout kept certain banks from closing - and saved others from the tsunami that would have followed - so the likes of Goldman Sachs, who currently whinge that "we got no bailout, so give us our bonus" are simply ignoring what would have happened if the market had got its way.....they were next in line.

    Its a house of cards - fueled in the large part by "money from nowehere" in the form of house price inflation and company percieved value on the markets - paper shuffling exercises that are not viable in the long term - hence the "big adjustments" every now and then.

    Finally, and this relates to Public sector pay as well - No One needs £250K a year.... no one - let alone a bonus of this, or more.

    In reality, this country should regard any salary above £75,000 or thereabouts as exceptional. Go back a couple of decades, and the pay gap - which will always be there - was not the pay chasm it is today. GP's, Senior Teachers, Policemen, Senior Professionals (bank, law, engineering etc etc) would earn perhaps two or three times the national average. Exceptionally four. So today, with £25K being about UK median - £100,000 would be exceptional. Therefore £40 - £80K would be the natural territorry for the higher paid - but there are Council Leaders all over the country earning twice this, and yet they run deficits each year, and fail to deliver the services they are paid to provide !!!

    Todays differentials- where mutliples of five or ten between shopfloor and MD - or bankteller to Director - or secretary and Salesmanager - are fairly commonplace, is simply not a long term option IF we wish to live in a civil, inclusive society.

    Someone please explain to me, and then tell the Corus workers in the North East, why 1000+ City bankers - whose industry this time last year was, literally, "bankrupt" - can now be paid £1million EACH in bonuses - on top of already high six figure basics ???

    Shameful they can even consider it, and worse still will be the squeels of pain when the tax bills - personal or corporate - land

    Unless that is, you're an accountant, paid to dodge/avoid/defraud your clients way out of the liability....then its payday.


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