Also, many of the people responsible have gone, and many of those picking up the pieces and doing well now shouldn’t be punished for the failures of others

Right at the beginning a Northern Rock shareholder said it all.

“You were paid as supermen, but you quite clearly aren’t”

Deferring bonuses for a year would take the heat out (a likely consequence of a one-year super-tax), and the most likely course.

For general levels of pay to come down, htere would need to be an over-supply of talent. Training more high-flying bankers would produce that.

The more difficult question is whether this move would send bankers overseas and affect the wider ability of the banking sector to prosper. It’s difficult, but I have two thoughts here. If it is a windfall tax (ie time limited) there would presumably be less incentive to move abroad if it clearly defined that the arrangement will be for a short period for a specific purpose. Secondly, I wonder whether we shouldn’t just call their bluff. When you boil it down to the basics, the banks failed, and failed miserably. I see no evidence that massively rewarded staff performed well, and if they choose to leave these shores, we’ll be losing failures. I’m tempted to say let this happen, allow market forces to replace these people with the next generation, who may well earn less, but might perform better. As I said in an earlier post, I see little evidence that huge pay delivers huge performance, and I would be prepared to test the theory on the banks if need be.