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Davos WEF 2011: Osborne calls time on banker bashing
George Osborne has given a clear signal the Government wants to halt the long period of “banker bashing” by admitting “we need to move on”.
In a wide ranging speech at the World Economic Forum in Davos, the Chancellor also repeated his pledge to repeal the 50p income tax rate, saying that the level was “temporary”.
He also said that new guidance on the controversial Bribery Act was imminent.
In comments made to an audience including leading businessmen and bankers, the Chancellor said the debate on the finance sector was “in a rut”.
But he argued that it was only after the banks had agreed to the Project Merlin deal on bonus payments and lending targets that a new approach to the City could be agreed. “We do need to move on,” Mr Osborne said, in comments that will be welcomed by banking leaders frustrated at the extended period of criticism.
“And one of the reasons we are discussing with the banks a settlement whereby the banks make the proper contribution to lending to the British economy and make a good contribution to our tax receipts, are responsible and constrained in their pay.
“In return we can then get on with promoting Britain as a great home for wholesale financial services.
“One of the reasons I am keen on trying to achieve this settlement is that I think it would help the whole British economy move on and get us out of a rut.
“But I am not prepared to do a deal unless I have something decent in return and we are in good discussions with the banks.
“I am hopeful that in the next few weeks we are able to make an announcement and agree that settlement, if it is a good deal.”
Mr Osborne was responding to a question from Dick Olver, the chairman of BAE Systems, who asked when the Chancellor was going to show leadership on “not bashing the banks”.
In his speech, the Chancellor said he wanted to see London as the “undisputed home” for financial services.
On tax, Mr Osborne said that, just as the Government had cut business taxes, he wanted to cut personal taxes.
“Let me make it clear: I am very conscious of the impact of personal tax rates on our ability to compete.
“That’s why the personal tax allowance is increasing by £1,000 from April.
“And it’s why I have said very clearly that I regard the 50p tax rate as a temporary feature of the tax system.”
Earlier this week the Government was knocked when Britain’s fourth-quarter growth figures came in at minus 0.5pc.
Despite saying the figure was disappointing, Mr Osborne said there was no alternative to tackling Britain’s debt problems. He described those opposed to the Government’s agenda on cutting public debt and simplifying regulation as the “forces of stagnation”.
“It’s clear that for some the temptation remains – a bit more government spending here, pumping the bubble back up a bit there.
“We are absolutely clear – allowing ourselves to be seduced by those siren voices would only lead to even greater disaster down the line.”
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