Posts tagged "EU"

EU bonus cap could double bankers’ salaries, City regulator warns

FCA chief Martin Wheatley says attempt to cap bonuses of those earning above €500,000 will lead to pay rises

A European plan to limit bankers’ bonuses could have the perverse effect of leading to a doubling of their salaries, the chief executive of the new City regulator, the Financial Conduct Authority, has warned.

Martin Wheatley told a conference that the attempt to cap bonuses at 100% of salary for anyone earning more than €500,000 (£420,000) could make it difficult to “punish” bankers by clawing back payments when things go wrong.

The European Union has provisionally agreed a deal to cap bonuses at one times salary – or double that with shareholder approval.

The last time regulators attempted to restrict bonuses, pay of middle-ranking bank staff, known as “vice presidents”, had gone up “by 100%”, said Wheatley. “And the same thing will happen again.”

The precise details of the proposals by the European Banking Authority, which sets the rules for members of the EU, are expected to be published shortly. But according to leaks on Friday, the EBA is for the first time publishing a basic salary level – €500,000 – at which the cap, approved by the European parliament, kicks in.

Tim Breedon, the former chief executive of Legal & General who is now a non-executive director at Barclays, acknowledged that the way bonuses across the industry had been structured before the financial crisis had been a “catastrophic failure”. Barclays is now trying to link pay to the conduct of its staff, not just their financial performance but is yet to decide how to react to any cap on bonuses.

When the idea of a bonus cap was first raised earlier this year, Andrew Bailey, the head of the Prudential Regulation Authority, the City’s new banking regulator, warned it could push up banking salaries by £500m a year.

Experts at PricewaterhouseCoopers estimated last week that up to 10 times as many bankers as expected could be captured by the cap if the EBA does set a minimum pay level of €500,000. It hinges around defining those deemed to be “material risk takers” who are supposed to covered by the bonus cap. Until now it has been up to the banks to decide which of their staff falls into this category.

EU ridiculed for banning olive oil jugs from restaurants

Move to ensure olive oil is served in non-refillable bottles condemned as weirdest decision since curvy cucumber ruling

EU bureaucrats have been ridiculed for shifting their focus from fighting the eurozone’s debt crisis to impose strict rules on how restaurants serve olive oil.

From 1 January eateries will be banned from serving oil to diners in small glass jugs or dipping bowls and forced instead to use pre-sealed, non-refillable bottles that must be disposed of when empty.

The European commission said the move was designed to improve hygiene and reassure diners that olive oil in restaurants had not been diluted.

But critics say the rules are a sop to Europe’s olive oil producers, and will only add to the frustration felt by many towards a bloated bureaucracy regarded as out of touch with ordinary people.

The commission said its proposal was supported by 15 of 27 EU-member governments, including the continent’s main olive oil producers – Italy, Greece, Spain and Portugal – which are among the countries worst affected by the euro crisis.

Germany opposed the plans in a private vote; Britain, which regularly cites perceived meddling from Brussels as the reason for its strained relationship with Europe, abstained.

The German newspaper Süddeutsche Zeitung described the move as the “weirdest decision since the legendary curvy cucumber regulation”, referring to now-defunct EU rules on the shape of fruit and vegetables sold in supermarkets.

The regulations are based on those in force in Portugal since 2005 and are part of an EU initiative to help olive oil producers hit by rising operating costs and falling profits in recent years.

London bankers plan to dodge new EU crackdown on bonuses

Banks may increase salaries to compensate for EU plans bringing 10 times more London bankers within pay net

An EU crackdown on bankers’ bonuses in the City of London will just lead to a surge in basic salaries and other initiatives to circumvent regulations, experts warned on Saturday.

Banks, still unpopular for their leading role in the financial crisis, are keeping their avoidance plans under wraps, but industry figures were happy to boast privately that they could run rings round Brussels.

“Banks are pretty good at getting round rules,” said one senior financier. “If there are restrictions on us paying bonuses, we will be looking at paying some other kind of allowances.”

The High Pay Centre said it feared banks would increase basic salaries to compensate for any bonus cap, arguing that such a move would be unjustified.

Bonuses have risen to the top of the agenda before the publication this week of proposals from the European Banking Authority, which would limit extra payouts for anyone whose salary is above €500,000 (£420,000).

This is in addition to earlier EBA proposals, which are scheduled to take effect in 2014-15, that will require bonuses for certain staff inside the EU to be capped at 100% of their salary – or 200% with the approval of shareholders.

The new proposals – leaked at the end of last week – could lead to up to 10 times as many London bankers than previously expected being brought into the pay net, say experts. Many in the City warn that draconian EU measures against bonuses will chase staff to join rivals from Asia or the US.

Nicholas Stretch, a tax partner with the City law firm CMS Cameron McKenna, said that basic salaries would have to be increased to compensate for any bonus cap. “People will have to increase salaries, but this will increase employers’ fixed costs and means banks will have to pay more in the way of compensation should they want to lay off staff in the bad times,” he said.

The High Pay Centre said City bankers produce an endless stream of “unsubstantiated scaremongering” whenever the EU or other regulators threaten further action against banks.

“We should call their [bankers'] bluff,” said Deborah Hargreaves, founding director of the High Pay Centre. “Let’s see what happens. I do not think that they are such rare talents. There is a range of people who could do these jobs.”

But Hargreaves also fears that banks will find ways round any new rules and agrees they are “very good” at this. Nevertheless, she believes a bonus crackdown is still worthwhile and can be expected to extend eventually to the whole of big business.

Nigel Farage’s fascist barrage | Michael White

Ukip members are more Rotary Club malcontents than fascists; more pin-stripe shirt rebels than blackshirt bullies

The irony police were quickly on the scene this morning after Ukip’s leader, Nigel Farage, went on BBC Radio Scotland to denounce the demonstrators who disrupted Thursday’s impromptu press conference in Edinburgh’s Old Town as “fascist scum”.

It’s the kind of mindless labelling which will probably fill both sides with righteous indignation. “Fascist” has been a label of abuse between, and within, political parties since 1945 when Hitler’s toxic brand followed Mussolini’s into the graveyard of history. It is a form of radical and authoritarian nationalism that suppresses rival ideology and individualism, seeking to harness the nation behind the power of the state.

Its most successful exponent in Europe was General Francisco Franco, who led an abortive coup against Spain’s hapless republican government in 1936 and, after a savage three-year civil war in which clerical reaction and half-baked mystical fascist ideology were harnessed to the cause, died in his bed only in 1975. Ukip is not exactly in the old monster’s league and Farage’s less than austere lifestyle will not endear him to austere and high-minded reactionaries.

In reality, there was unlikely to have been a single fascist in sight on the Royal Mile when the police had to rescue the Ukip leader from 50 or so noisy young people. Farage certainly isn’t remotely a fascist by any reasonable test. Proper fascists, more likely to be found in the old National Front, the fractious BNP or the English Defence League (EDL), would soon take care of him. “All mouth and no trouser,” the self-styled hard men must mutter as they watch him on Question Time.

But not fascist either were the kids accusing him of the usual clutch of thought crimes, racism, homophobia, anti-semitism and being scum himself as well as being a “bawbag”. It’s a left-leaning charge sheet and comes as a package. Anti-semitism is a new one on me, but a Ukip councillor (“I’m not racist’) was caught posting anti-Jewish and anti-Muslim sentiments the other day, so that must be it.

Bawbag is broad Scots for being an annoying and useless person as well as slang for scrotum. Nowadays, it is also a brand of colourful boxer shorts of the kind Farage probably does not wear, being sartorially conservative – blazer or pin-stripe suit and regimental tie – in ways more consistent than his politics and policy prescriptions usually are.

Some of the protesters were clearly nationalist, a point confirmed by the invitation to “shove the union jack up your arse”. But others probably just don’t like his brand of Thatcherite free market populism any more than they liked it when a puzzled Margaret Thatcher failed to persuade most Scots that their greatest economist – Adam Smith – had the answer to their problems.

But there was no violence on Thursday, another indication that wholesome student protesters, not “fascist scum”, were the driving force in Edinburgh.

Farage was careful not to blame the SNP for the stunt when he called on Scotland’s first minister, Alex Salmond, to condemn the anti-English sentiments of his tormentors. Ukip has Scottish members – I have met some – but Farage is determined to show that his brand of British nationalism can attract votes in Scotland as it has modestly proved it can in Wales and Northern Ireland, the latter potentially more fertile ground because it has much in common with the aggrieved tone of lower middle-class Unionism.

In another sense, too, Nigel Farage started this ruck himself. At a Westminster press gallery lunch last month, he went out of his way to denigrate Salmond as a political fantasist who campaigns for an independent Scotland while wanting to stay inside the EU, which – says he – denies the nation states of Europe their sovereign independence. “Dreamland,” he called it. The remarks earned him some media attention in Scotland.

To some rival politicians the similarities between the pair are more striking, with both engaged in “stop the world I want to get off” politics and dreaming of unfettered national self-determination as the remedy for their people’s woes, but usually duck the hard choices and risks that accompany these legitimate aspirations. Alistair Darling, leader of Scotland’s Better Together campaign, made the comparison at the gallery lunch.

Farage himself says his party would not exist, nor need to exist, if the Tory party had remained true to Thatcher – it was launched in 1993 as her rejection of John Major was becoming evident and sterling’s ejection from the EU’s exchange rate mechanism prompted a surge of anti-Europeanism in the Tory ranks that split the party and helped Tony Blair to win three terms. David Cameron’s failure to win a majority or govern with authority has unleashed the genie again.

So Ukip is partly a protest vote – the current repository of “sod them all” disaffection – and partly a revolt of the Tory grassroots against the perception that it is led by a metropolitan elite that does not understand or care about them. In varying forms it is visible in all parties and – five years into a major economic downturn – in most advanced industrial states.

Will it become a permanent fourth party in British politics or fade when one or other of the big parties acquires another transformative leader? Impossible to say in this time of flux. Will it perform a reverse takeover on the Tories, as the populist Reform party did in Canada? Ditto.

But compared with the Golden Dawn party in Greece – who do have fascist credentials – and other fringe parties evident in hard-hit areas of the EU, Ukip is pretty mild. It contains some nasty people, but plenty who are just fed up or cross, often with good reason: the recession has hit them and their neighbours hard. They rightly resent being snootily dismissed by Cameron as “fruitcakes”.

The mood is more Rotary Club than Mussolini’s blackshirts or the brownshirt bullies who terrorised the streets before Hitler came to power. Farage is a free market man, not a statist. He believes in abolishing all sorts of intrusive state action – health and anti-speeding measures, as well as propping up venal banks. He wants to cut taxes, though he also wants to spend a lot on better public services, too. Nostalgia for a lost or never-was past is his currency.

Ukip – which some liken to the French shopkeeper revolt of the 1950s led by Pierre Poujade – insists it struggles to identify and expel nasties who get through its rudimentary selection net, which is (a point of honour) locally devolved. Given that its candidates did better than expected in the 2 May county elections we can expect more.

But it won’t be like Hitler’s Night of the Long Knives in 1934 when the brownshirt SA’s leftwing faction was butchered. Britain has no right to assume it will never be spared those sort of politics – no one has. But we are not there yet.

Leaving Europe would be bad for British business | John Cridland

We must not lose sight of what’s important – economic growth. This means maintaining access to, and influence over, the EU

This week’s political demands for a bill to underpin the prime minister’s promise of an EU referendum have been a distraction from securing growth and jobs, which have to be the UK’s top priority. On Friday, when I speak at the British-American Business Council, I’ll be laying out the case to re-focus on economic growth – both at home and abroad. And the best way to achieve that is to keep a firm foothold in European trade at the same time as increasing exports elsewhere in the world.

Just as the prime minister was trying to do the right thing in Washington – showing leadership on the transatlantic trade and investment partnership and highlighting the positive value of the EU – back home, that focus was lost.

The recent tussle presents an inward-looking picture of British politics to the outside world. For those in business, it feels like a diversion from what we should be doing in Europe: restoring growth through trade deals; and championing reforms that we want to make all of Europe more competitive. These issues matter to the public too because their main concerns are about the economy, jobs and the cost of living.

The demands for a bill to underpin what the PM had already promised don’t actually move the debate forward. David Cameron had already set out his terms for a referendum by 2017 on continued membership of a reformed EU. We already had clarity over the process – if not the outcome.

Business has to make the nuts-and-bolts case for what our relationship with Europe should look like. Maintaining our influence over, and our access to, the single market will be central to that. We have to focus on a positive vision of reform so Europe does less of the things we don’t want, and more of the things we do: boosting competitiveness and resisting bad policies that work against growth and stability. Let’s be clear: being a member of a reformed EU is the best way to preserve market access.

There are some who say that we could retain access to the single market without being a member of the EU; that the UK could withdraw and have a relationship more akin to Norway’s or Switzerland’s. I’d urge them to really look at the detail.

Norway’s membership of the European Economic Area (EEA) – being outside the EU but part of the single market – means that it still pays the bills and follows the rules but has much less influence on EU decision-making than if it had a seat at the table. As the Norwegian Conservative MP Nikolai Astrup said to my team during their recent fact-finding mission to Norway: “If the UK wants to run Europe, it needs to be in Europe. If you want to be run by Europe, feel free to join us in the EEA.”

While this works for Norway’s economy, the British would never accept such a relationship. It removes none of the issues identified as problems by those who want to leave the EU. And while Switzerland appears to have greater flexibility to pick and choose the EU regulations it applies, the 120 or so agreements that govern the EU-Swiss relationship took years to negotiate from the point at which it rejected the terms of the EEA in the early 90s.

At a time of great economic challenge, could UK businesses struggling at the margins survive without access to our primary market for an unknown period? Submitting to rules without the power to influence them is not my idea of much-touted greater sovereignty.

The debate over our future relationship with Europe is a worthy and valid one, but we must maintain our perspective. What we need now is economic growth and jobs across the European continent. That means putting all hands to the pump to boost our competitiveness in the international arena and getting some major trade deals signed on the dotted line.

Leaving Europe would be bad for British business | John Cridland

We must not lose sight of what’s important – economic growth. This means maintaining access to, and influence over, the EU

This week’s political demands for a bill to underpin the prime minister’s promise of an EU referendum have been a distraction from securing growth and jobs, which have to be the UK’s top priority. On Friday, when I speak at the British-American Business Council, I’ll be laying out the case to re-focus on economic growth – both at home and abroad. And the best way to achieve that is to keep a firm foothold in European trade at the same time as increasing exports elsewhere in the world.

Just as the prime minister was trying to do the right thing in Washington – showing leadership on the transatlantic trade and investment partnership and highlighting the positive value of the EU – back home, that focus was lost.

The recent tussle presents an inward-looking picture of British politics to the outside world. For those in business, it feels like a diversion from what we should be doing in Europe: restoring growth through trade deals; and championing reforms that we want to make all of Europe more competitive. These issues matter to the public too because their main concerns are about the economy, jobs and the cost of living.

The demands for a bill to underpin what the PM had already promised don’t actually move the debate forward. David Cameron had already set out his terms for a referendum by 2017 on continued membership of a reformed EU. We already had clarity over the process – if not the outcome.

Business has to make the nuts-and-bolts case for what our relationship with Europe should look like. Maintaining our influence over, and our access to, the single market will be central to that. We have to focus on a positive vision of reform so Europe does less of the things we don’t want, and more of the things we do: boosting competitiveness and resisting bad policies that work against growth and stability. Let’s be clear: being a member of a reformed EU is the best way to preserve market access.

There are some who say that we could retain access to the single market without being a member of the EU; that the UK could withdraw and have a relationship more akin to Norway’s or Switzerland’s. I’d urge them to really look at the detail.

Norway’s membership of the European Economic Area (EEA) – being outside the EU but part of the single market – means that it still pays the bills and follows the rules but has much less influence on EU decision-making than if it had a seat at the table. As the Norwegian Conservative MP Nikolai Astrup said to my team during their recent fact-finding mission to Norway: “If the UK wants to run Europe, it needs to be in Europe. If you want to be run by Europe, feel free to join us in the EEA.”

While this works for Norway’s economy, the British would never accept such a relationship. It removes none of the issues identified as problems by those who want to leave the EU. And while Switzerland appears to have greater flexibility to pick and choose the EU regulations it applies, the 120 or so agreements that govern the EU-Swiss relationship took years to negotiate from the point at which it rejected the terms of the EEA in the early 90s.

At a time of great economic challenge, could UK businesses struggling at the margins survive without access to our primary market for an unknown period? Submitting to rules without the power to influence them is not my idea of much-touted greater sovereignty.

The debate over our future relationship with Europe is a worthy and valid one, but we must maintain our perspective. What we need now is economic growth and jobs across the European continent. That means putting all hands to the pump to boost our competitiveness in the international arena and getting some major trade deals signed on the dotted line.

EU referendum bill will be debated, MP announces: Politics live blog

Andrew Sparrow‘s rolling coverage of all the day’s political developments as they happen, including the private members’ ballot and Google giving evidence about tax avoidance to the public accounts committee

EU referendum: why did Tories publish a draft bill, and what happens next?

Everything you need to know about the moves to hold a referendum on Britain’s EU membership in 2017

What is the coalition line on an EU referendum?

The Conservatives and Liberal Democrats supported a bill (now law) saying there would be a referendum in the future on any proposal to transfer further powers to Brussels. But they are split on an in-out referendum. The Tories want to hold one by 2017, after a renegotiation of Britain’s relationship with the EU. The Lib Dems are not supporting legislation now, although Nick Clegg has said that he thinks a referendum of some kind at some point in the future is now inevitable.

What happened on Wednesday?

There was a vote on an amendment to the Queen’s speech motion saying the Queen’s speech should have included legislation for an EU referendum bill. Government MPs don’t normally vote against the Queen’s speech, but David Cameron knew many of his MPs would vote for this and so he allowed backbenchers a free vote. Conservative ministers were told to abstain. Some 114 Tories supported the amendment, but it was defeated by Labour and the Lib Dems.

Why did the Tories publish a draft bill?

In January Cameron said he would publish a draft bill for an EU referendum before the general election. He published a short bill on Tuesday, partly so that a Tory MP coming near the top in Thursday’s private members’ bill ballot could adopt it and partly in the hope that this might reduce the number of MPs voting against the Queen’s speech on Wednesday.

What happens next?

On Thursday the Conservative MP James Wharton came top in the private members’ ballot. He said he would adopt the EU referendum bill and so now a second reading debate will take place, possibly on Friday 5 July. The Tories have said that their MPs will be told to vote for the bill.

What will Labour and the Lib Dems do?

Labour and the Lib Dems do not support legislation now. But it is not clear yet whether they will turn up in large numbers to vote against it at second reading.

Will the bill become law?

Probably not. Even if it gets passed at second reading, it is relatively easy for just a handful of MPs to block a private member’s bill by using delaying tactics. The Tories could get round this by using a timetable motion to guillotine debate. But only a minister can table a timetable motion and so a move of that kind would have to be taken by the government. Although the Tories support the bill, the government as a whole doesn’t because the Lib Dems are still resisting legislation.

EU referendum bill to be put forward by Tory MP

No 10 confirms that Tory MPs will be instructed to vote for bill but will not have the support of their coalition partners

A drawn-out parliamentary battle over the holding of an EU referendum by 2017 is now in prospect after the Tory MP James Wharton came top of the private member’s ballot and vowed to try to pilot such a bill on to the statute book.

Downing Street confirmed that Conservative MPs would be instructed by their whips to vote for the bill but they will not have the support of their coalition partners.

The move follows a show of strength by Tory Eurosceptics on Wednesday night in a vote on an amendment on the Queen’s speech that regretted the absence of an in/out EU referendum bill in the government’s legislative programme. Dissenting Conservative MPs numbered 114, although David Cameron’s aides insisted the vote was not a blow to his authority because he had allowed a free vote and was relaxed about the outcome.

John Baron, the leader of the Tory dissidents, said: “We are going to keep at this. There is deep distrust out there. Legislation is more realistic than a manifesto promise.”

Wharton, the young MP for Stockton South, said his bill was the best way to deal with the issue and to allow parliament to decide.

“I think that the prime minister has been very clear in saying that the Conservative party position is that people should be given a say by the end of 2017, and parliament should be given an opportunity to legislate on that,” he said.

“I hope that when it is brought before parliament, that other MPs from other parties will be able to support it and agree with me that, whatever you think about Europe and our relationship with Europe, the matter needs to be settled and people need to be given a choice.”

Wharton’s bill will receive its first reading in the Commons on 19 June. The first slot for a private member’s bill debate in the Commons is 5 July and Wharton has said he has already been in discussions with the government whips to take up the bill prepared by the Conservative party earlier this week.

Wharton, one of the 114 dissenters, is likely to be able to ensure the bill receives a second reading, moving it on for line-by-line scrutiny at the committee stage. But the bill will struggle at the report stage if hundreds of amendments are tabled and there is insufficient time.

Only a government minister can move a programme motion, but the lack of Liberal Democrat support for the bill means the leader of the house, Andrew Lansley, will not be able to do so.

Cameron will impose a three-line whip and order MPs to vote for the EU referendum bill. A Downing Street spokesman said the prime minister, who had not spoken to Wharton about the bill, “intends to give it the full support of the Conservative party”.

Asked if Cameron was concerned about provoking a fight with the Lib Dems, the spokesman said: “No, for the simple reason that the prime minister and deputy prime minister have always acknowledged a difference of opinion on this issue.”

Baron, who tabled Wednesday night’s amendment, said he would back the bill even though he regards it as a “second-best option” because it was important to try to get legislation through.

In the Commons, Angela Eagle, the shadow leader of the house, said the Tory party had “descended into chaos on Europe, and the bill was ‘entirely spurious’ and did not include a implementation clause or money resolution.

“[Last night] was the 35th Tory rebellion on Europe in this parliament. If that isn’t an undisciplined team and a prime minister who follows his party, rather than leads, would you like to tell me what is,” she told the Commons leader, Andrew Lansley, who had insisted Wednesday’s vote was not a rebellion.

The Liberal Democrats’ deputy leader, Simon Hughes, accused the Tories of “obsessing about Europe”.

EU referendum issue ‘must be resolved’, says Tory MP – video

Conservative MP James Wharton says the issue of whether or not to remain in the EU has to be settled, so the government can focus on ‘what really matters’ to voters