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Tuesday, September 21, 2010

Clegg Plays To The Gallery

The coalition Deputy PM, Nick Clegg, has used his party's conference as an opportunity on BBC radio to play to the gallery and indulge in "bashing" banks' bonus schemes.

The Independent reports that he warned the banks that the government would not stand idly by if they paid senior staff "gratuitously offensive" bonuses. He has raised the prospect of a new levy on banks, insisting that the government reserved the right to take "serious action" if banks went ahead with "ludicrous, sky-high bonuses".

All very well as a soundbite.

However, in reality were the government to continue down the path of "punishing" the banks and trying to regulate bonuses schemes, the banks will simply "up sticks" and move their offices and staff to other less "hostile" regions. The resultant fall in tax revenues will far outstrip any revenues that a bank levy might hope to raise.

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