Miliband Slams 'Bonus, Bust, Bailout' Culture

Labour leader Ed Miliband has urged "responsibility and restraint" in banking sector pay, saying the industry cannot continue along a path of "big bonuses, bust, and bailouts".

In a speech in the City, Mr Miliband said banks play an important role in the UK economy and cannot be divorced from it.

Banking was in a unique position as it was an important industry in itself for Britain but also provides the lifeblood of the UK economy, he added.

Mr Miliband explained that the recent public anger over the bonus of Stephen Hester, the chief executive of 82% state-owned RBS, was because the effects of the financial crisis were now being felt across society.

"When most people see their incomes stagnate, their bills go up, their public services cut, and their jobs increasingly become insecure, pay and bonuses at banks seem to carry on as if the crisis never happened," he said.

A generation ago, the world 'banker' evoked an idea of solidity and reassurance, he remembered.

"And the idea of a vote in the House of Commons to affect the pay of an individual banker was as outlandish as the idea of a vote in the House of Commons to affect the pay of an individual doctor or lawyer."

But Mr Miliband suggested that the issue was about more than just the pay of Mr Hester, and like the Bank of England Governor Mervyn King, said that a restraint on bonuses would make more money available to lend out.

Small and medium-sized enterprises (SMEs) were finding it particularly hard to access capital, he said, with many seeing banks as a problem to overcome rather than a partner in projects.

He added that the Government also had a role to play, giving grants to SMEs with exceptional potential the way the US government helped companies like Apple and Intel.

It was up to the state to work with the private sector to get the market moving, Mr Miliband said, giving the examples of Singapore, Germany and the US.

The Labour leader proposed the idea of an additional tax on bonuses and a streamlining of overall remuneration so that there was only one base salary and one bonus.

But he said the issue of pay was not isolated to the financial industry, referring to the investigation into the tax avoidance schemes being used by some public sector employees.