David Cameron sets out 'moral' capitalism ideas
Published: 19th Jan 2012 11:26:41
David Cameron is outlining his ideas about "moral" capitalism in a speech on the economy.
The prime minister is expected to demand greater transparency in pay and bonuses to try to prevent what he has called "rewards for failure".
He is also likely to suggest measures to make it easier for businesses to become co-operatives.
It comes as reports suggest taxpayer-owned bank RBS may offer a bonus of more than £1m to its chief executive.
But RBS chairman Sir Philip Hampton said the suggestion was "inaccurate and premature".
"Neither the remuneration committee nor the board has discussed the position on the bonus for our CEO for 2011 at this stage. Any suggestion to the contrary is therefore untrue," he said in a statement on Twitter.
The leaders of the three biggest Westminster parties have been talking about the need to bring about "responsible capitalism" in recent weeks.
Labour leader Ed Miliband is calling for a change in the rules on company takeovers to try to prevent the fate of some British firms being decided by investment funds hoping for short-term gain.
Earlier this week, Deputy Prime Minister and Lib Dem leader Nick Clegg unveiled his desire to create a "John Lewis economy", greatly increasing the number of companies owned by their employees.
The government is consulting on new rules which would require the UK's 15 largest banks to reveal remuneration for their eight highest-paid non-board executives - board executives' pay is already published. It is due to report back next week.
Mr Cameron has also promised to give shareholders a binding veto on executive pay and dismissal packages in the hope it would help curb excess.
He has said he understands that unwarranted bonuses make "people's blood boil", but has accepted that in some cases large rewards are justified because top executives have been responsible for generating significant investment and growth.
The BBC's political editor Nick Robinson said he did not expect many major policy announcements in Thursday's speech and the real aim was to seize control over some potent political ground.
He says the PM understands there is considerable public anger about the issue and is aware that Mr Miliband has been attempting to claim it as his own.
The Labour leader has accused the coalition of following his lead on "responsible capitalism", saying it is proof he is in tune with voters.
Mr Miliband also used his Labour Party conference speech last year to attack "predatory" companies that made excessive profits.
In an article in the Financial Times on Thursday, the Labour leader also says he wants to protect British firms from hedge funds "chasing a fast buck".
All of this political wrangling comes during bonus season in the City of London.
Wall Street bank Goldman Sachs, which posted a 47% drop in net earnings to £2.8 billion for the 2011, has announced an annual bill for pay and bonuses of £7.95 billion. Up to 5,300 of its staff based in the UK are all eligible for performance-related bonuses.
According to the Financial Times, Royal Bank of Scotland chief executive Stephen Hester could be in line for a bonus of £1.3-1.5 million on top of his £1.2 million salary - even though the value of the bank's shares fell by almost half last year and it has recently announced 3,500 job losses.
Mr Clegg said last week it would be "totally unacceptable" for the company to give "lavish bonuses" when "lots of people are being laid off, the economy is still in an uncertain state and we, the taxpayer, have bailed out RBS to the tune of billions and billions of pounds".
The UK taxpayer has an 83% stake in RBS and the Treasury says talks with the company about bonuses are "at an early stage."
Introduced bank levy - now 0.088% on the value of all of the debts of UK banks - aims to raise £2.6bn a year
Wants repeat of tax on bank bonuses - says it could raise extra £2bn. Says bank levy amounts to a tax cut
Wants "no rewards for failure". Not in favour of a salary cap, but wants to use shareholder influence to rein in pay
Supports High Pay Commission recommendations, including employees on salary committees
Consulting on new rules to require UK's 15 largest banks to reveal remuneration for eight highest-paid non-board executives (board executives pay is already published)
Simplify pay packages and require investors and pension fund managers to disclose how they vote on pay. Publish ratios between highest paid and company average
Wants shareholders to have veto on excessive pay and dismissal packages
Wants shareholders to replace board members on remuneration committees
Pressing ahead with plans to separate retail from investment banking
Supports code of conduct for bankers - could see them struck off
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Harvard CitationBBC News, 2012. David Cameron sets out 'moral' capitalism ideas [Online] (Updated 19th Jan 2012)
Available at: http://www.ukwirednews.com/news/219035/David-Cameron-sets-out-moral-capitalism-ideas [Accessed 10th Mar 2014]
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