Is bashing the bankers risking the New Labour image?
Interesting discussion between Don Paskini at LibCon, and John Rentoul (here, and responding to Don here).
John wrote that Labour’s decision to tax bankers bonuses was a further nail in the coffin of New Labour and their hard won reputation for economic competence, and that it would lose the goodwill of the types of voters in marginal seats that they need to win future elections, rendering them unelectable for a generation.
Dan replied pointing out correctly that the polls actually showed that higher taxes on the wealthy are popular, and the penalisation of city bankers especially so. John’s response was that they were popular in the short term, but would do much greater damage to Labour’s image in the long run.
I’ve some sympathy for John Rentoul’s view here. Polls on whether the public agree with a policy or not do not always tell the whole story. When looking at a policy there is the direct effect of whether people agree with it or not, and the indirect effect of what associating themselves with that policy will do to a party’s image.
The example I normally use is not taxing the wealthy, but immigration. Polls consistently show that immigration is an issue people care about, and that they want harsher restrictions upon it. Surely immigration would be a winning issue for the Conservatives? Not necessarily, since they have also spent the last four years trying to change their image to look less reactionary and “nasty”. If they made anti-immigration a key message, it might itself be popular, but would risk making them look bigoted and unpleasant.
It’s the same with taxing the rich. If tax hikes are necessary, polls always show that people much prefer them to hit the rich. Equally, penalising bankers is a route to easy popularity. The downside is that it risks making Labour look like a party that doesn’t like success or aspiration, an image that Tony Blair managed to shed.
It’s a balance though, and in this particular circumstance I don’t know if John is correct. It may be that the public’s desire to see the bankers cut down to size and appetite for taxes that apply to those richer than them outweigh the potential damage to Labour’s image – the reality is that in judging trade offs like this, polling can’t necessarily give you a firm answer.
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I would say that because of Rentoul’s sycophancy towards Blair, and bilious hatred of Brown, all is comments have to be read with this in mind.
I suspect Anthony’s commentary on this is broadly correct – that while punitive taxes on high earners per se would be unpopular, the concept of tackling the bankers now does not fall into this category in most people’s minds.
Rentoul talks of the “negative effect on perceptions of Labour over the long term because it makes the party look as if it doesn’t like success”. Most people don’t regard bankers as the most ’successful’ of people right now, and so long as this doesn’t become part of a ’soak the rich’ campaign I can’t see it doing much harm to Labour for four main reasons; 1) It is seen as fair 2) It is time limited to meet extraordinary circumstances 3) Cameron has indicated broad support for it 4) It is being copied internationally.
Of all these point 3) is probably the most salient. If this was a return to rabid leftist politics then surely Cameron and Osborne would have jumped on it straight away for their own campaign purposes, but instead they appear to have backed the principle and the method.
I think Rentoul is correct about the long-term consequences of Labour’s bankers-bashing policy – particularly as if it continues, we’ll likely see various financial institutions moving their bases elsewhere.
I think it’s cheap politics myself – Brown has had 12 years to regulate banking and has successfully wriggled out of his personal responsibility by placing the blame on bankers themselves rather than the laissez-faire environment in which he allowed them to operate. Now his efforts to seem tough and punitive risk long-term negative economic consequences for the sake of scoring a few cheap points in time for a general election. I’ve no doubt it’s very popular in some quarters, but they tend to be those quarters where noses are cut off to spite faces.
CLAD – bear in mind certainly (and John has come down very firmly on one side the argument!), but it doesn’t mean the broader point that popular policies can still have a negative effect is wrong.
Alec – I think it’s less of a problem for the Conservatives to back it, because no one is ever going to think they don’t like rich people, so they can happily jump onto a popular policy. The reason the Conservatives don’t go even more on anti-banker stuff is probably just because they think it would be bad policy.
(It’s probably the same for Labour with immigration, they probably wouldn’t suffer in the same way the Tories would if they did go heavily on immigration because they are the party that has traditionally supported and sympathised with Britain’s ethnic minorities. When Gordon Brown said “British Jobs for British Workers” people thought it was a bit ham fisted, but no one seriously thought he was revealing some inner racist. )
It’s the Nixon to China thing. There are some things a right wing politician can get away with a left winger couldn’t (and vice-versa)
One also has to consider who is most pleased by a particular policy, and who is most offended by the overall image.
If your popular policy has the effect of making people who are inclined to support you more likely to go out and vote, that’s advantageous, to an extent. But if it has the effect of damaging your image among swing voters, then it’s probably a negative, overall.
The bankers bonus is red meat for the heartlands and may well contribute to sustaining Labour’s slow recovery in its core recovery. Further to the comments above, it would be good to get polling from marginals on a question along the lines of “Will new, higher taxes for the rich discourage entrepreneurship and enterprise?”
I meant of course, that the tax on bankers’ bonuses is red meat for the heartlands (Freudian slip no doubt…)
I don’t agree with John Rentoul at all. A large part of Labour’s recent problems can be attributed to voters believing that the party does not act in favour of those it exists to represent. This is a bold step and John grossly underestimates the anger felt towards the irresponsible bankers who have frittered so much away and lined their pockets doing so. This measure in fact doesn’t go far enough for many people but it is unmistakeably the act of a Labour government and insofar as it isn’t the sort of thing Blair would have done makes the Party that little bit nearer to that which its erstwhile supporters would like it to be.
What is undeniably damaging for Labour, IMHO, is the rise in National Insurance contributions.
Barnaby – I think that’s true up to a point – but there’s a risk that you just end up with higher turnouts in Labour-held seats, as a result.
“safe Labour seats” that is.
I accept your point Anthony, but as Alec said, these are not seen as punitive taxes by the electorate at large. It’s not as if it is the ‘pips squeaking’ message. The vast majority of those that will be affected by this tax will be Tory voters. And has been shown by all post PBR polling, the vast majority of the electorate support the policy.
@James Ludlow
Brown has long campaigned for tighter international regulations on markets. He did not bring them in unilaterally, because he didn’t want to damage the City’s competitiveness.
@ Barnaby – “the anger felt towards the irresponsible bankers who have frittered so much away and lined their pockets doing so”
But it was Brown who presided over all of this, first as Chancellor and now as Prime Minister. And now the Angry are obediently focusing their attentions on the scapegoat he’s provided and letting him off the hook.
James – Argh! Don’t go reeling off into an argument about who is responsible or not so early in a thread. The site is about discussion of public opinion and polling, and whether they are right or wrong to do so, polls repeatedly show that people blame banks and bankers for the mess (they blame Gordon Brown too actually, but to a lesser extent).
Let’s accept that, and move on. There’s no point arguing about whether they are wrong to do so because we can’t change it
Excuse typo – RBS, not RSB.
@James Ludlow
[snip - when I've hauled people in for derailling the thread with partisan arguments, please don't start it off again! - AW]
Sorry Anthony. I posted that before you stepped in.
[No probs - AW]
The news that many of the affected banks are going to take the tax on the chin and pay the bonuses anyway suggests the “punish the bankers” has turned into “punish the banks”.
The extra tax comes out of the bank’s profits rather than the pockets of the beleagured bonus-earners, so not so vindictive.
I can see this becoming a more damaging issue for Labour if there is a hint that it will be repeated, or become standard.
I think we’ve had the discussion on the optimum level of tax before the winners start deserting – and it was around 43% (ignoring other “hits” such as limiting reliefs to 20%)
FWIW I was one of the many who voted Labour in 1997 in the belief that they had left the “pips squeak” policy behind. Darling could neutralise the issue by emphasising that it is intended for this tax year only.
Many centre-ish, reasonably well-off voters will have doubts otherwise.
I am afraid we need to get real. No self respecting bank ( other than those owned by the tax payer ) will be paying this tax. The “collect period is from January through to April, and only applies to banks, not other financial institutions. They willeither, and some already have, move the payment to June or the appropriate people to Geneva. This is an ill thought out policiy on the back of the proverbial fag packet.
I take the point about turnout in safe Labour seats. It would however be a mistake to think that working-class voters live only in safe seats. They live in marginals too, and often in great numbers.
I think CAP’N SCOOBY has it.
This will appeal to core vote for Labour, which is Brown’s target right now ( and judging by the Polls -successfuly targetted )
The irony is considerable though.
The tax is not levied on Bankers but on Banks.It was designed to change their behaviour & reduce bonus payments.
It is reported that most Banks plan to pay the tax and pay the bonuses. The result is twofold :-
1) The Banks’ employees will not suffer ( except by dint of Income Tax) as portrayed. The Banks’ shareholders will presumably suffer as earnings available for dividend are compromised.
2) The levy will raise more tax than anticipated.
So it might be surmised that this will be :-
Politically popular on the core left ( which matters to Labour)because they are under the misapprehension that this taxes bankers.
Politically unpopular amongst the middle class ( which doesn’t matter to Labour )because their dividends get reduced, and they will know the bankers are the reason.
Financially beneficial to the Treasury because the purpose of the levy ( reduced bonuses) will be ignored.
Two up to Darling I think.
Interesting that the higher tax policy is especially popular with older voters, because a lot of marginals have younger than average electorates. For example, both Swindon seats, both Milton Keynes seats, Redditch, Tamworth, etc.
I was just about to make the same point as John TT made regarding the fact that this isn’t about hitting the bankers personally. I’ve seen a couple of reports suggesting Darling was very conservative in his estimates about bonus levels and some are expecting the tax take to be much higher at around £2.5b – that would help make the tax move more popular I feel.
I also think Sean Fear is right in that the NI move is potentially more damaging. However, there appears to be a general view that bad news is expected, that something has to be done and one way or another it’s going to hurt. If Tim Montgomerie is anything to go by the Tories themselves are nervous about a 20% VAT campaign from Labour which is the likely alternative to the NI rise – more regressive and worse for the least well off. In this atmosphere, while there are always greater risks for labour in putting up any tax as AW says, it’s hard to see how the Tories can capitalise fully as the questions over their own policy prognosis will always be lobbed back at them. Indeed, what the polling seems to suggest is that voters don’t like Labour’s PBR measures (except the bank tax) but some are more frightened of what Osborne will do instead. Clearly there is the issue of which groups these are and how their geographical spread will affect seats, but nonetheless the impact is out there.
I still maintain Cameron was wrong to make such a loud noise about cuts – it frightened the horses and has given Labour a chink of light. At the very least, it has allowed Labour to get away with raising some taxes.
Who is overpaid? The Guardian are running a blog on the proposed BA strike and many people think BA cabin crew are
vastly overpaid and immature to boot.. Someone I know who studied economics at University told me the median wage in the UK was £10 000, PS Did a member of the Cabinet state today that ‘we were in a grave financial state’.?
Alec,
Assuming that Cameron expects to win, I don’t think he has any option but to speak about cuts.
Winning on a “no cuts” platform, and then having to implement them, would do far more damage to the Conservatives in the medium term, than not winning in the first place.
Barnaby JL Marder
“I take the point about turnout in safe Labour seats. It would however be a mistake to think that working-class voters live only in safe seats.”
I presume you are being ironic in suggesting that Labour voters are working class? If so, I suggest that you append (Fe) to your posts – otherwise someone will think you are serious!
Plenty of Labour voters are working class, particularly in their heartlands.
I think it’s just too early to say if, in the long term, Labour’s image in key marginal seats is damaged by this move.
Sean Fear
YouGov latest poll – Lab support in ABC1 – 31% : C2DE – 30%
The polls need to be considered within the context of the political debate at the time. At the moment, this is being dictated largely by Labour and their attack on bankers. At the same time, the Conservatives have been very quiet – probably keeping their cards close to their chest.
Labour have very successfully turned bankers into the enemy of the state, the Reichsfeinde, responsible for all our ills in order to distract the masses from the government’s failures. It’s a classic political technique – and historians will note how it is not the first time that a European government has chosen to blame the ‘money lenders’ for a countries woes. For a political party to attack any single group based simply on their occupation is as disgusting as attacking a group for the colour of their skin or their religion. Not all bankers are bad and greedy – many have generated most of the wealth on which (with the massive debt we now have) the New Labour project was built.
I think that today in parliament we got from the shadow defense minister a glimpse of what the the Conservative GE rhetoric will be – “the country is in a mess due to gross economic mismanagement by Labour”. The fact that many banks have not needed ’saving’ or state aid, that the government failed in its duty to regulate the banks, and that New Labour was happy to collect the taxes from those that were profiting from iresponsible lending has been glossed over to-date. There has been no genuine debate on the Labour government’s role in the mess. I imagine that the lack of debate, and the narrowig in the polls, will change when the Conservatives start their GE campaign. Labour want to focus on the future as they know they can not defend their past performance. I don’t think that they are going to be allowed to get away with that.
Only when we’ve had these issues have been debated publically will be know where parties stand in the polls.
Colin you are ignoring the following:-
If Darling’s scheme works and the banks drastically cut back on the cash bonuses they pay out there will be a major loss of tax revenue on the bonuses at the top tax rate (plus some lost N I revenue). This may be greater than the tax achieved on the bonuses actually paid out.
To the extent that the tax bites it will not necessarily hit dividends but may reduce the bank’s Reserves carried forward and reduce their lending capacity. Whether or not the dividends are reduced the Government as a major shareholder in the banks could be disadvantaged.
I think it has come to a point now that people are fed up of ‘X Factor’ Politics. Basically very little substance but plenty of marketing, PR and manipulation of the masses.
We need a straight fight between right and left for the first time in twenty years. The New Labour premise has always been geared towards a centre right perspective of ultimately leaving the free market to do what it wants with some redistribution, extra public spending and a moderate increase in worker’s rights.
The facts are as follows:
1) The free market system has led the whole economy to near collapse with the backbone of it (the banks) not being able to exist without support from all of us through our taxes and cuts in wages and benefits.
2) Despite this many bankers are keen to get their snouts in the trough as soon as possible again. Showing that this elite do not possess any morality as well as not creating wealth and jobs without state support.
3) Labour appears to be undergoing some sort of deathbed conversion to the idea of redistributing wealth through the 50% tax, bankers bonus tax as well as restricting tax relief for pensioners on high earners.
4) The majority of these measures affect the top 5% meaning the vast majority of the middle classes do not take the hit as much as the wealthy.
I believe a class based politics in these circumstances would be very popular. This is not about hatred it is about sticking up for yourself and not allowing the vast majority to be pushed around by an elite at the top who have seen the cloak removed from them that not only are they greedy, they are not wealth creators or business geniuses at all.
Karl Marx was right about one thing. It is the working people who create the wealth. Without them getting out of bed each morning these institutions and bosses within them would not be creating the profits and becoming millionaires of their backs.
Mike
I am happy to volunteer to be paid millions by the banks – on which I will happily pay 50% tax, NIC, and the extra tax.
I’m sure there are others like me.
Apologies, Anthony. I’m tired and a bit cross today and being too argumentative.
Dinner party now – I’ll return in a better, less argumentative state of mind tomorrow.
Other people: behave yourselves!
@ MIKE
“If Darling’s scheme works and the banks drastically cut back on the cash bonuses they pay out there will be a major loss of tax revenue on the bonuses at the top tax rate (plus some lost N I revenue). This may be greater than the tax achieved on the bonuses actually paid out. ”
Yes-that point has certainly been made Mike.
I was merely thinking of the implications if what is reported is correct-ie that Banks will take the hit & pay the bonuses.
In any event, this is a once off measure. It has no medium/long term elements, or any semblance of strategic thinking in it.
It is a populist ;one time;pre-election vote winner ….whose central objective seems to have been secured ie more votes rather than less bonuses.
A strategic & sustainable approach to the problem of “short termism” in banking bonuses, would have been the use of of regulation on Banking Reserve Ratios and Bonus Entitlement /payment method.
“Karl Marx was right about one thing. It is the working people who create the wealth. Without them getting out of bed each morning these institutions and bosses within them would not be creating the profits and becoming millionaires of their backs.”
You could just as easily say that wealth wouldn’t be created for anyone unless well-off people invested their money in businesses in the first place.
“4) The majority of these measures affect the top 5% meaning the vast majority of the middle classes do not take the hit as much as the wealthy.”
But they still take a hit, without a doubt.
A very interesting piece Anthony.
I think an awful lot depends on how any Party promulgating or talking about difficult issues is perceived by the public. If for example Labour came to be seen as anti business/aspiration thenin the medium term the bashing of the bankers may not play so well.
Immigration became a turn off for voters as far as the Tories were concerned as it played in to a perception that they were narrow and a bit nasty. Very interesting though to know how it would play now with the voters in view of the excellent work David Cameron has done
in “decontaminating the Party” I wonder whether it might play rather better.
Take it from me Labour’s not likely to lose votes from
their attitude to bankers bonuses. It seems to me that Cameron & Osbourne are no more sympathetic to us
as a tribe. Will my vote change? I think not, I’ve a very long memoury. Oh and I’m still a workingclass banker
worth every penny that I’ve earned
I agree that the jury is out on much of this.
One should remember that popular views can change.
For much of the 40s and 50s the ‘new deal’ (USA) or ‘fairness (UK) agenda was in the ascendant. It changed gradually during the 60s and 70s until Regan/Thatcher created an ‘new orthodoxy’ now.
The answer to those who say the market must decide is that the market did not know its own business. New Labour may have solved an old problem but not resonate in the current circumstances.
Maybe if the conservatives thought a ‘Blair’ was what they needed will turn out to have been the right answer for the wrong election. I supect we may be in the process of creating a different orthodoxy – like the 1970s – than the one we all thought prevalent until the banking collapse.
It may be that there is a greater apetite for policy that would have been regarded as unacceptable five, ten or twenty years ago; as the 1980s policy would not have been accepted even in the Nixon/ Heath governments.
How polls can pick this up I don’t know. But maybe we should be asking different questions than those we’ve formulated. There is a big group of voters who vote LibDem who might well be attracted to a more ‘egalitarian’ ‘fair’ eceonomic policy and that possibly could create a new consensus.
Will Brown offer Lib Dems PR and if he does will Cameron not have to offer the same? It’s interesting times we may be living in no matter what party you supoort.
But the proof of all this dpends upon Labour creeping up further in the polls than they have to date.
This is now not impooible but I must say that I’m still to be convinced a turing point for Labour has been reached. Everytime this has appeared to happen in the last five years it has vanished like a mirage.
But what I’ve written may still be relevant to the next government….hence my view that like 1992 this may be a good election to lose.
@ ALEC :-
“I still maintain Cameron was wrong to make such a loud noise about cuts – it frightened the horses and has given Labour a chink of light. ”
It depends what you mean by “wrong” Alec.
If the GE is won by Labour after a campaign designed not to frighten the horses, is Cameron in a worse place?
If such a victory is a narrow one-perhaps reliant on an accomodation with other parties, and Labour introduce a fiscal tightening which bears no resemblance to their pre GE promises, what then?
A government which sought no mandate for a scale of fiscal tightening which it subsequently finds ( or knew ) will be necessary.
Another election in 2011 -on a central Labour plank of what exactly?
The tax rate under Brown’s administration has been doubled from 10% to 20% on the poorest. The tax rate on those earning £20,000 a year upwards has been raised via national insurance increases. The tax rate on bonuses of more than £25,000 has been raised to 50%.
Looked at in this context we see a high tax regime being installed for every sector of income in our economy. And it is already a very high tax rate economy, with extensive fiscal drag. Heartlands appeal arguments raise two questions; what is going on in the Heartlands that such widespread tax-hikes do not hurt; and what is going on in the Heartlands that without tax-hikes on working people Labour will lose support?
Hatfield Girl must have a short memory. In 1997 Income Tax was 24%, GB has reduced that to 20%. The 10% band was a short term measure introduced by GB to give quick relief to the lowest paid. NI thresholds have been raised to coincide with Income Tax levels. For small businesses CT was 25% (I know I paid it) – GB introduced the low income threshold of £10,000, and a CT rate of 10% – this was then lowered to 0% to stimulate new businesses. GB also introduced the R&D Tax Credit. These and other tax reduction measures stimulated UK business out of the 1990’s recession. As the economy recovered these measures were removed and replaced with direct tax levels that are well below those GB inherited from John Major. The other major reform was the raising of tax thresholds for older people – so that the first £9490 of all income is now Tax Free. In reality there has been a major shift of tax from the lower paid, and those on fixed incomes – towards tax on expenditure. Working Tax Credits have helped the low paid more. National debt was 43% when Labour came to power, that fell to 37% on the eve of the current recession – which is why we have been able to stimulate the economy at a lower % costs of GDP than other major indutrialised nations. Accusations of GB being a Tax Raiser are simply incorrect. By all means attack him on other policies, but please be factual when referring to tax rates
Matthew,
I agree with so much of what you said!We have endured 30 years – or 29 if we exclude the last 15 months – of right of centre Governments.Ted Heath and Harold Macmillan were way to the left of Blair and Brown.
If i’m a gambler and win I pay no tax under this Government. If I’m a share speculator I pay 18% top rate tax. If I clean toilets I pay 32% on any pay over £7000.
Anyone know when the December Ipsos-MORI poll is coming out?
@ANDY STIDWELL
They seem to do the fieldwork mid month (now-ish) and publish a week later. So I should be expecting it on the 22nd or 23rd of this month. Unless the analysis gets delayed by the Chrimbo bash.
‘Accusations of GB being a Tax Raiser are simply incorrect. By all means attack him on other policies,…’
EG, You are defending Brown, but I am not attacking Brown in this forum. The thread is about the damage polices popular with certain groups could do to over all Party image. Hence it is interesting to consider why tax rises on all sections of the electorate are interpreted as a response to Heartland political desires.
I know it might be a naive question but here goes:
Given that the tax on bankers’ bonuses is a one off windfall, aren’t those bankers likely to do something clever whereby they might defer getting their bonuses until another year? Alternatively, if the tax is so punative mgiht they not forgo them and have a larger salary instead?
I’m sorry if this is a bit rambling but if either of these then occur might it not be possible for this windfall tax to be a complete flop?
I know there are some very learned folk on here, perhaps you may know the answers to these questions???
HARDPRESSEDTQY:-
It isn’t a tax on the recipient employee ( bankers).
It is a once off levy on their paying employers ( banks)
The Treasury have said they will dissalow avoidance of the sort you suggest-but have not yet issued guidance-including on what constitutes a “bank” for this purpose.
Some banks have said they will pay the tax, and pay the bonuses, thus forgoing the change in behaviour which the levy was intended to encourage.
…………& by the way Darling’s proposal is in respect of “discretionary cash bonuses”.
Pending detailed guidance notes this is presumed therefore to exclude “non-cash” bonuses ( shares) and/or so-called “guaranteed ” bonuses, which are contractually payable & not discretionary.
Until the fine print appears know one knows how this will all turn out.
Hardpresse… Many of the banks have decided to pay up, probably raising up to four times the amount Darling expected (according to City a.m.) Kind of defeats the object of repairing their balance sheets, or kind of proves the banks are returning to rude health, depending on your view.
“historians will note how it is not the first time that a European government has chosen to blame the ‘money lenders’ for a countries woes. For a political party to attack any single group based simply on their occupation is as disgusting as attacking a group for the colour of their skin or their religion”
@ Tony M
I’m sorry but the section that I quoted from you above is ridiculous. You seem tot be trying to equate the bank bonus tax with the Nazis which is a very interesting leap of logic. A rubbish one that has no place on a polling discussion forum. Taxing and blaming bankers for a recession that was (partly but significantly) caused by them is not the same as racism. In any way.
Stop trying to equate opponents of our banking system as crypto-Nazis using phrases like “Reichsfeinde”. Guido is much more that place for that sort of rubbish.
I really have to agree with John.
You just need to read the forums to see that it’s a very popular policy across the parties support.
Daily Mail and Guardian readers a like are in general consensus on the subject in my opinion.
Bankers need to make a gesture. And this is a great one.
People just see it as a gesture. They realize that it’s not a long term strategy.
This how voters think in my opinion, across the board:
“I’m not getting a pay rise, and my services will be cut because of these banks. So they should suffer a bit as well”.
It’s a nailed on winner.
Can I ask why people are referring to long term conequences and long term policy?
This is very likely just a one off gesture, for the purposes of an election.
I really doubt whether it will continue past May 2010.
“What is undeniably damaging for Labour, IMHO, is the rise in National Insurance contributions”
I really don’t agree. The move may have a short term unpopularity, but I think that most voters realize that tax rises are as likely and neccesary as cuts.
Labour’s polling hasn’t been affected at all by the tax rise. Which suggests that people accept the position they were in.
You could even argue that the tories are possibly suffering from it more.
As suddenly they are the party not making serious moves on the economy.
The tories polling on economic competancy has crashed in the last 6 months.
By more than 15-20% on average.
“For a political party to attack any single group based simply on their occupation is as disgusting as attacking a group for the colour of their skin or their religion”
When you are a major shareholder of these companies, you can attack your employees however you want.
People turned on bankers, as they are now paying their wages and bonuses. Little other reason.
Nobody would have a problem with bonuses, if the tax payer wasn’t basically funding them.
Bankers can make and lose how much they want, as long as it’s there money.
Which is the genuine law of the jungle
“Hardpressedtqy ”
To answer your queries, I think the governments goal was to stop big bonuses in a very testing financial year for the public.
If the banks defer bonuses for 2 years, then I think they will feel that they have done their job.
Labour want bonuses to be paid, in truth, when the voters are more confident in the economy and their own jobs.
If the banks want to defer payment for 2 years (when they will have more capital themselves no doubts), then it will probably suit both government and banker
Finally, I think you are actually overestimating the intelligence of most voters, and the morals of political parties.
This is all about “Bankers will suffer like you for 12 months”.
The general public won’t be questioning the concequences, or the morals, or the reasons behind the move.
They will just be saying “Hell yeah. I haven’t had a pay rise. Why should they?”
The policies obviously just a very short term (doubt it will even make it out of 2010 before it’s scrapped) idea. To boost moral in voters. To send out a message of:
“The Labour party isn’t elitest, we are all the same”.
I don’t agree with looking into it in that great a detail. For every voter that looks into the fine print, there will be a thousand who think the general concept is great.
It was a very good idea. Not original I should add (happened a few times in less high profile circumstances in the past). But very topical.
I think that’s the tories problems at the minute. They have a habit of “party first, voter second”. Cameron wouldn’t do it at risk of upsetting the party.
Along with the marriage tax breaks (is it 1959 or 2009?) I think you could argue that Cameron is pandering far too much to the party, and ignoring the electorate.
A lot of Labours recent policies have played on this.
“The tories polling on economic competancy has crashed in the last 6 months.
By more than 15-20% on average.”
Populus and Yougov both showed the Conservatives’ economic ratings going up.
And all polls showed the NI rise to be very unpopular.
Mike
You can’t be serious. You must be a Tory troll.
If the banks reduce their bonuses they make more profits and are taxed on these profits.
It is clear that some people believe that Labour are eating into the Tory vote. I still firmly believe that those who have decided to vote Tory have already made their minds up and will do so. (which is why Tories are still around 40% consistantly). The reason i can see that Labour are narrowing the vote is from Lib Dems and floating voters. I dont necessarily believe that tax on Bankers Bonus (”red meat for the heartlands”) is the be all and end all and will change the outcome of the election. I think that Labours vote is still very fragile and could easily go backwards if their is an further bad economic news between now and the election.
It will be very interesting to see what happening as regards polling in the marginals.
Graham
That’ll be why I have the impression that each government since 1945 has been worse than the last.
Eric Goodyear
I remember doing tax returns when the top rate was 19/6 in the £.
@Hatfield Girl – “And it is already a very high tax rate economy”. In many ways I would have to side with Eric in your debate. You’re wrong about tax rates on the under £20K earnings (these were at 24% in 97, reduced for a good while to 10%, but now 20%). You also forget about tax credits – we can argue whether these are taxes (’positive’ ones) or benefits, but they effectively reduce tax rates for the low paid even further. They are enormously complex, which is a key criticism of virtually everything Brown did as a Chancellor, but they are quite effective.
Overall, UK has a mid ranking tax regime in terms of tax as a % GDP. Not as low as the US, but below most European countries. Our public services and infrastructure reflect this – in the US roads are falling apart and millions have no healthcare, while in France they would not want our NHS, but no doubt would like our taxes. You pays your money and takes your choice. I don’t criticised Brown for overtaxing – in many ways we should have paid more tax in the boom years. My criticisms would be complexity, waste and value for money, and some technical points about distribution. For example, reducing capital gains tax to 18% instead of coordinating it with income tax rates means wealthy people can avoid substantial tax liabilities by declaring income as capital gain.
On the broader debate, maybe your reaction sums up Anthiny’s comments at the start of this thread? Any hint of Labour tax rises frightens people, as there are still assumptions out there that Labour are the party of high taxes.
Income Tax—-the last time that I paid 65% was twenty
two years ago under Maggie’s government and this
was the same government that doubled VAT seven years earlier. As for next election almost everyone must know that things will not get any easier after 2010
but which party may soften the blow– that will be the question asked in the polling booths.
As for most people mortgage repayments are now 130 pa down and retail sales are up almost everywhere!
—Daily Telegraph Business 14/12/09
@ David Greybeard
Re: Mortgage Repayments
That was in the governments plan and so they shouldnt get the credit for that. I would rather have a job and pay higher mortgage payments thanks very much!!
I meant to say that was not in the governments plan……
@Colin – “@ ALEC :-
“I still maintain Cameron was wrong to make such a loud noise about cuts – it frightened the horses and has given Labour a chink of light. ”
It depends what you mean by “wrong” Alec.”
I understand what you are saying. I was speaking purely in the narrow terms of winning the next GE only. To be ‘correct’ in the fullest sense of the word would probably mean short term electoral suicide, which is why neither Labour or the Tories have come remotely close to telling us in detail where the full set of ‘tough choices’ will fall.
@Mark R – “It is clear that some people believe that Labour are eating into the Tory vote. I still firmly believe that those who have decided to vote Tory have already made their minds up and will do so. (which is why Tories are still around 40% consistantly). ”
It is interesting that for a while the Tory vote was sub 40% in a few polls, and now seems to have edged back up. The 37-39 scores generally occured with Labour just below 30, but now Labour and Tories are both a point or two up, with Labour at their highest point for a long time in two polls. If these were real trends, rather than MOE or sampling derived, it does suggest that there are still more soft Tory votes for labour and LibDems to try and peel away.
thank you for all the responses to my last question, it was genuinely very helpful in understanding this whole thing.
However, at the risk of trying everyone’s patience can I ask a further question or two???
As I understand it from what has been said this “tax” is being paid by the banks rather than the individuals. We as taxpayers are now the owners of quite a number of the UK banks. So doesn’t that mean that we taxpayers are not only paying the bonuses but also paying the tax on the bonuses as well?? And aren’t we all going to cop it again when we have to foot the bill for increased NI contributions??? Unless I have got something seriously wrong might that not actually undermine the popularity of any charge or tax?????
@ Alec
I take on board what you are saying but I still cant see that people are moving across from Tories to Labour, otherwise wouldnt we see the Tory vote going down and Labours vote going up?. The only conclusion I can come up with is that people who are floating voters are leaning towards Labour rather than the Tories and also Lib Dem seem to be reducing when Labours vote is going up. I could be wrong but that only my perception of what seems to be going on.
” So doesn’t that mean that we taxpayers are not only paying the bonuses but also paying the tax on the bonuses as well??”
Your logic is irrefutable Hardpressed.
It’s a funny old world isn’t it?
I was keeping an open mind on Angus Reid but they appear to have shown themselves to be Angus Reid have just shown themselves to be statistically dubious!
http://www.visioncritical.com/wp-content/uploads/2009/12/2009.12.14_Scotland_BRI.pdf
Compare their story – comparing British and Scottish attitudes to constitutional issues – with the data tables
http://www.visioncritical.com/wp-content/uploads/2009/12/table_scotland.pdf
GB unweighted base – 2004
Scotland unweighted base – 174
How many times has it been said that a sub-sample of that size not demographically weighted to the base population is meaningless?
Not quite that simple Hardpressedtqy. The bonus pots come from bank profits, which are themselves taxable. The Exchequer wins because the tax take on the bank’s profits, that makes up the bonus pot will be higher than the tax that would have been taken in profit tax.
Mark R —-could you really stand a 16% mortgage interest rate again and 10% unemployment at the same time? That’s what I call real pain
@ David Greybeard
Who siad anything about 16%. they were fine when they were 6%. At least if I had an an income I would have a better chance of paying higher rates.
Sorry but the one thing that annoys me is when the government say they have given us lower interest rates when it was the economic downturn and not them that gave rise to it.
Nothing personal. OK
@c.l.a.d
Thank you for that. It is an interesting way of looking at it and I do get your point. But I have this nagging thing at the back of my mind that even the banks that are still making losses are still giving bonuses.
David Graybeard “could you really stand a 16% mortgage interest rate again ”
They were hard times. Still in those days you could pick up a serviceable 2 bedroomed house for £20k, and I did, so the interest was £320 pm, quite affordable really.
Same house is on the market now for £140k, so even a 5% mortgage (go out and try and get a better deal) is expensive. And the unemployment rate is 9.1% in my region.
Swings and roundabouts really.
Sorry for psephology-free post.
C.L.A.D
I think Hardpressed has a point.
Anything the Treasury takes from a state owned bank reduces the net worth attributable to the taxpayer.
I know that share price is not related to net worth-but whilst losses are being sustained, paying this tax to the Treasury is merely repatriating some tiny part of the state’s funding of those losses.
The only way in which the Taxpayer could have gained was if the tax had been a charge on the bonus recipients-people who have escaped the furore & the tax & all the righteous indignation.
@ Shoopkeeper Man
Yes I agree with your comments. What makes my blood boil is when the government want to take the credit for low interest rates as if it were some sort of great master plan in the grand scheme of things.
And as for the economy getting better, well without being a kill joy try telling that to the 1700 steel workers on Teeside. I think they might disagree on that one.
Apolgies for the spelling by the way, I obviously meant @ Shopkeeper Man and not Shoopkeeper Man
@Mark
I’m only in my 40s and I have started using phrases like “what goes around comes around”. Booms, busts, high interest rates, low interest rates, high inflation, low inflation, high unemployment, full unemployment. I have experienced them all, and have suffered and benefitted from them all.
Politicians claim all the credit for the good times and blame the bad times on someone else. I’d me more critical if I didn’t know that the public were so easy to fool.
Now to the polls. Whilst bashing rich, undeserving bankers is electoral gold at the moment, these bankers are slippery fish and will defer, evade, avoid and take up residence in Her Majesty’s tax-free dominions around the globe.
Does anyone think that there will be a dip in support for Labour when it emerges, as it will, that no bankers suffered or were harmed in the making of this law?
@Shopkeeper Man – “Politicians claim all the credit for the good times and blame the bad times on someone else. I’d me more critical if I didn’t know that the public were so easy to fool.”
Quite right. One of the features of this downturn is that it was built up on the back of interest rate levels (particularly in US and UK) that were too low because governments and central banks thought they had cracked inflation, rather than realise their economies were being stoked by ludicrously cheap Chinese imports holding down prices on the backs of a fix yuan/dollar exchange rate.
Politicians rarely avoid global market influences, but some can ride the wave a little better. Brown does deserve credit for maintaining growth after the dotcom bubble and for keeping us out of the Euro (wouldn’t Ireland love to devalue now) but by and large you’re right.
“these bankers are slippery fish and will defer, evade, avoid and take up residence in Her Majesty’s tax-free dominions around the globe.”
Shopkeeker, I promise you they are not in the main slippery or malevolent. They are normal, hard working people carrying out their tasks according to widely accepted ethical grounds. The mistakes were not as a result of personal human error by people on bonus systems, but instead a result of a “crowd” mentality where no-one wanted to be left behind, or to be the one pulling the rug .
Leadership went missing, if you like, but those leaders in error can be counted on the fingers of very few hands, and in the Global environment, it is perhaps understandable that keeping in line with received wisdom is more difficult than it used to be.
The current reward mechanism might in future be regarded as out of date, but we seem to be stuck with basic+bonus+share options for now. All of which part-controlled by a complex HMRC system of rules, caps, limits etc.
The employees actually have very little say (apart from by applying for work with rival multi-nationals) – it’s the people who advise on the myriad schemes who are having their brains fried trying to mitigate. No financial services employee I know would dream of requesting re-location on the back of this levy. It’s higher up than the people who actually receive the cut of the £4bn
The culprits are rather removed by now, and there’s no appetite in this country to string them up. Thank goodness. I think the support for Labour as a result of this policy is softened by the fact that Osborne supports it (and might screw down further if given the chance)
My only slightly partisan opinion is that the whole system of reward and taxation thereof should be simplified, and I personally believe Brown/Osborne cannot bring themselves to do that.
e.g. the mechanism by which 40% pension relief is obtained through the PAYE system is simply impossible to unwind. You’d have to ask people to save post-tax, and that would destroy the whole concept of private pensions.
I’m almost with you Alec except that I think high interest rates would have kept the pound very high. It’s been too high IMO for years, and manufacturing has suffered.
I’d have favoured low interest rates plus credit controls. My girlfriend was offered a 125% mortage for £140k. She earned £12k at the time.
Bubbles burst.
I meant “Brown/Darling” cannot bring themselves to simplify tax ( but I believe Osborne would probably make apig’s ear of it anyway!)
@ JohnTT
I didnt say malevolent. I hold no grudges for anyone, anywhere.
It is natural if one feels that one is overtaxed and punished to be a slippery fish and to avoid the taxmans keepnet.
These rich bankers help pay for my childrens education (my meagre tax contributions wouldn’t cover it).
Whilst battering these slippery fish may seem fun in the short term we run the danger that they will swim across the oceans and lay their golden eggs elsewhere. Meanwhile the regulators stay here, in deeper waters, avoiding the hooks of the baying public.
I can’t think of any more bad fish analogies so I shall end my post. I just hope fins improve.
At the end of the day, a lot of the money that Labour spent on schools and hospitals was raised as a direct result of the overheated financial system. Labour does rather seem to be trying avoid their share of the pain, having spent all of the gain.
The bankers could perhaps have been more prudent in the past, and loaned only at far more sensible LTV ratios and income levels. But had they done so, Brown and Darling would have had to forgo many billions of pounds of VAT, stamp duty and other levies and so would have less “Investment” (spending) to brag about.
But I suppose “we rode the bubble and squeezed it for all its worth, and now we’re paying the price for it” isn’t a very good policital message.
Err, that last post was actually me. Heaven knows how the word “Bryan” found its way into the name box. I guess my girlfriend was searching Facebook on the wrong tab or something..
I think there should be no tax on bonuses. However, I think that RBS should have been nationalised and the bonuses should be distributed to the general public as the main shareholders.
Anthony, Mike Smithson has just posted an intriguing analysis of the latest ICM poll, raising the question of some possible fixing in Labour’s favour. I’d be very interested on your thoughts on this.
He certainly didn’t – he just highlighted that the raw sample was a particularly Labour one, and what the implications might be for MORI if there is a seasonal reason for it.
The very Labour raw sample for ICM should not have caused any particular problems for the ICM poll, since they weight by past vote and corrected it. If it had been MORI, who do not politically weight their samples, it would have produced a poll that was very good for Labour (though not as good as some there are speculating, since even without specific political weighting, their demographic weighting would have addressed it to some extent).
Basically, if it was just the sort of sample that random chance spits out (and the chances are it was), it doesn’t mean anything at all. If it is a sign that raw samples in the run up to the Xmas are systemically more Labour, then it could be a reason to expect MORI’s poll to be good for Labour too.
Didn’t he? I understood this:
“Was there something special, I wonder, about last weekend that caused a disproportionate number of 2005 Labour supporters to be home ready to answer ICM’s questions when the pollster called?”
to be a suggestion of something untoward.
Aspiration is fine.
Abject greed is something else. And that’s what we are talking here.
James,
Nope (unless he’s suddenly started drinking lead based paint or something) – he’s suggesting that there’s something odd about people’s behaviour last week that produced a sample that was more Labour (such as most of them seeming to have spent their weekend queuing outside Bluewater where pollsters cant reach them)
Perhaps there were a good many Tories who lied – saying they’d voted Labour last time, but never again etc in order to affect the swing figures and cheer Cameron up.
On second thoughts, let’s not go there. most people aren’t cunning are they?
There wasn’t a big bingo tournament on telly at the time was there? (cf the PBR not class-ism by me!)
In was surprised to find that, within a sample of 1009, 70 people refused. Had I paid for a sample of 1000, I’d expect 1000 successful calls.
Is this the norm?
Shopkeeper Man – I’m amazed that as little as 7 percent refused. If that’s the level of non-response, then clearly there isn’t such a thing as non-response bias. But it implies that Britain is a nation of politics junkies and the level of turn out at the elections seems to indicate otherwise.
You’re thinking about different things.
When doing a phone poll, firstly there is non-contact bias (the phone numbers who the pollster rings, but no one picks up the phone. They will typically ring back several times over several days to try and contact them, otherwise this would be a bias against people who are out a lot).
Then there is refusal bias, the ones where people pick up the phone, the pollster asks them to take part, and people say no thanks.
Companies do not habitually make these numbers public, but out of all the phone numbers dialled, I think it’s something as low as 1 in 6 phone calls that actually result in an interview.
The refusals here are something different – they are people who agree to answer the survey, but just refuse to answer that particular question (the sort of people who say “That’s between me and the ballot box”. Gah!)
I see now.
It’s very complicated isn’t it? I started using browsing your site Anthony with the view that opinion polling was basically the same as “Family Fortunes”; the more I delve the more fascinating it becomes.
I think it is made better by the fact that I couldn’t give a toss who wins, so long as it’s close enough for me to enjoy election night in its full glory. It’s a shame that exit polling is so accurate these days as it slightly spoils the fun, but with the brand new incumbency-penalty we should get a few portillo moments.
In the absence of any new polls, does anyone have a particular favourite Portillo moment? Goldsmith taunting Mellor was a good one.
@Shopkeeper Man – I too am suprisingly ambivalent about the result, but I have been dreading a walk over election as possibly the most boring news event ever (apart from dead pop stars etc)
“In the absence of any new polls, does anyone have a particular favourite Portillo moment? Goldsmith taunting Mellor was a good one”. My Portillo moment must be when Anthony King excitedly said of one shock result in a former Tory safe seat (can’t remember which seat it was) something along the lines of ‘this isn’t an earthquake, this is an asteriod striking the earth and wiping out all known life..’
You mess with these people at your peril it seems!
From a SKY News Blog today :-
“The fallout from the Government’s new bonus tax continues to rain down on Whitehall.
I have it on good authority that a number of major banks are poised to rebuff ministers’ requests for tens of millions of pounds in funding to support the launch of the National Investment Corporation (NIC).”
To answer the question, I think it probably could a bit, but is balanced by people also wanting to punish the bankers.
I think it’s an indulgence. The important point is to reform the flawed regulatory system where the separate FSA and the Monetary committee weren’t looking at the whole picture.
It is vital Britain has a successful financial sector. Who else relies on it to create work in other sectors, or the tax it pays? You and me.
Some excellent points raised by Osborne, particularly the contraction sleight of hand, but it is still hard not to wince at the squeaky George delivery.
Banker bashing has become a sport which is encouraged because it diverts attention from others worthy of blame in this whole financial debacle.
Others include the government, the FSA, individuals who racked up too much debt, and of course the previous Chancellor and now PM. Due to the recent history of government, I see this phase of banker bashing as spin to mask the real picture. To bash the people who contribute massive sums to the UK economy does not seem rational, but it feels good in desperate times.
BoE has calculated that a 20% reduction in bonuses & dividends between 2000 & 2008 would have accumulated additional reserves equal to the entire taxpayer-funded rescue -which might then have been unnecessary !
@ Villa bali
Rateher a squeeky Osbourne rather than Dr Death Darling
“Some excellent points raised by Osborne, particularly the contraction sleight of hand, but it is still hard not to wince at the squeaky George delivery.”
Piers Fletcher Dervish
Last week nicely hidden away on the same day Darling made his speech the Office for National statistics issued a report estimating the government pension black hole at a whopping 2000 billion. You then add current debt at 1400 billion still growing, plus and the bank bailouts plus PFI and other possibly hidden debts, dropping tax revenues and the real debt figure could be around 4000 billion + or 3 times GDP, even for Labour this must be an all time record. Not forgetting quantitative easing at 200 billion.
If I were Cameron I wouldn’t be so keen to win the next election.
New Angus Reid poll on politicalbetting shows a 16 point Tory lead
Banker bashing could be a new blood sport.
Hunting with dogs is banned, but not hunting with small shareholders. Then for the oiks there could be I’M A BANKER, GET ME OUT OF HERE and half an hour of interview with Paxman would earn you a plate of soup.
Then there are possibilities with stocks, but not the kind bankers are used to. That would be really popular.