UK Politics

David Cameron says UK must build 'a better economy'

Prime Minister David Cameron has said the UK must "build a better economy" that is "fair and worthwhile".

He said "popular capitalism" should allow "everyone to share in the success of the market" and criticised an "out of control" bonus culture in the City.

A Co-operatives Bill will be introduced to help employees take a greater stake in their companies, he said.

Labour leader Ed Miliband said in a speech earlier the PM would be judged on "his deeds and not his words".

In a wide-ranging speech in London on the economy, Mr Cameron said he wanted to encourage firms to show "social responsibility" and said that the chancellor was considering new tax rules to prevent abuse.

He used his speech to discuss his vision for a transformed capitalism, based on two principles "which have been at the centre of Conservative thinking for centuries".

"The first is a vision of social responsibility, which recognises that people are not just atomised individuals, and that companies have obligations too.

"And the second is a genuinely popular capitalism, which allows everyone to share in the success of the market."

The prime minister said that "where they work properly, open markets and free enterprise can actually promote morality" by creating "a direct link between contribution and reward; between effort and outcome".

"So we should use this crisis of capitalism to improve markets, not undermine them, because I believe that out of this current adversity we can build a better economy, one that is truly fair and worthwhile."

'Too many barriers'

Co-operatives are organisations which are owned by their members, and run for their benefit - such as John Lewis.

In a speech in London, Mr Cameron said the issue was one he had "long cared about".

He said employee-led organisations were already delivering almost £1bn of health services and the model could also transform businesses, by giving employees "a greater sense of ownership in what they're doing".

The PM said there were "too many barriers" in the way to setting up co-operatives and the new bill would simplify existing legislation.

The government is consulting on new rules which would require the UK's 15 largest banks to reveal remuneration for their eight highest-paid non-board executives - board executives' pay is already published. It is due to report back next week.

Bank bonuses

Mr Cameron said hard work and success should be rewarded - and entrepreneurs who got rich should be celebrated. But he said the City bonus culture had "got out of control" in recent years.

His speech came as reports suggested taxpayer-owned bank RBS may offer a bonus of more than £1m to its chief executive Stephen Hester - on top of his £1.2 million salary.

But RBS chairman Sir Philip Hampton said the suggestion was "inaccurate and premature".

The prime minister said any cash reward at RBS - in which the UK taxpayer has an 83% stake - was limited to a maximum of £2,000.

He added: "There has been no meeting of the remuneration committee, there ought to be a proper process, but I can tell you something, if there's a bonus it will be a lot less than it was last year."

'Responsible capitalism'

He also welcomed a planned meeting of the Honours Forfeiture Committee to "examine the issue" of former RBS chief Sir Fred Goodwin's knighthood - granted in 2004 for services to banking - amid calls for it to be revoked.

Mr Cameron said he did not accept suggestions the government was "helpless" when it came to affecting pay at non-state-owned banks, arguing that greater transparency would ensure the market for top pay worked "properly".

Mr Miliband has accused the coalition of following his lead on "responsible capitalism", saying it is proof he is in tune with voters.

"I welcome the fact that other leaders are coming onto the ground that I set out last September... about the need to tackle predatory capitalism."

But he said Mr Cameron would be judged "on his deeds and not his words".

Dave Prentis, general secretary of the trade union Unison, said: "David Cameron claims he wants to create a fair economy, but we won't take him seriously until he acts to stop bankers awarding themselves huge bonuses."

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