This despite the one-off tax on bonuses and the introduction of the 50 per cent rate for the super-rich
For the last 12 months, in order to stave off more government action on bankers’ bonuses, we were reliably told by analysts and lobbyists that the City of London would move en masse to the Swiss ski slopes and forsake London.
In fact, according to research by Channel 4 News, the numbers of people applying for jobs in the Swiss financial sector last year actually fell, despite warnings by Tory mayor Boris Johnson that new taxes would drive them away. Over the last year just over one thousand British citizens joined the financial sector in Switzerland last year. Of these the majority applied for IT or other back-office jobs – a 7 per cent decline on the number of Brits applying for work permits in the sector.
Hand it to the City teams of paid-up public affairs lobbyists – they found a willing advocate of their cause in the Conservative mayor of London, Boris Johnson. When bankers’ bonuses were threatened in January he publicly argued that government measures were too harsh. While he urged voluntary restrain t on pay awards, he opposed government measures which have proved to be both effective and popular.
Through a freedom of information request I’ve discovered that Boris went beyond statements in the press, undermining government policies. In January he wrote to the chief executives of JP Morgan Chase, Goldman Sachs and Morgan Stanley describing “recent changes to taxation and other public policies” as “hasty and ill-thought out.”
While the words are in the context of outlining London as a financial centre and imploring the City to exercise more voluntary restraint, these senior bankers can be left in no doubt that Boris was against what he terms “punitive taxation” on bankers’ bonuses. Rather tellingly in his letter to the former investment banks, Boris describes measures introduced by Labour as “short-term”, indicating that a future Conservative government would not fulfill some of Osborne’s recent positioning over unpopular bankers’ bonuses and City reform.
In any case, we know now that any incoming Conservative government will be close to the banking community. Not just ideologically: 60 candidates are bankers or working in financial services, a survey from Insight Public Affairs reveals. Of course, it’s important to have outside experience in parliament, but the existence of a new, revived Tory bankers’ bloc – together with an unashamedly pro-banker Boris – will stymie any future plans not only with regard to remuneration, but also regulatory reform and ideas around a Robin Hood Tax or a Tobin Tax.
Taking government’s eye off bankers’ bonuses and City reform next year and for the years following will sow great resentment as public spending cuts are forced on government to pay back the debt incurred bailing out the banks. If we are not seeing it in full this year, then wait until the coincidence of the end of the current period of one-off taxation and individual restraint with the new public spending round.