Business boost before bank bonuses

An East Midlands Euro MP has called for banks to boost lending to businesses in the Region, following a vote for new rules to crack down on bankers' bonuses.

Glenis Willmott, the Leader of Labour’s MEPs, said: "Companies across the East Midlands continue to struggle to access credit which is needed to keep their business going and even to expand. However, last year British banks paid themselves an extra £10b in bonuses! This is money which could have been used in our real economy."

MEPs in Strasbourg last week backed Labour's proposals to change the way bankers' bonuses are paid. The new rules will include provisions to limit the amount of cash that can be paid upfront to bankers, so that money can be reclaimed where things go wrong.

Glenis and her colleagues believe that the new laws, due to be implemented in time for the upcoming bonus season in January 2011, will put a stop to the high-risk, short-term banking culture which was the main cause of the financial crisis.

Glenis added: "At a time when the government is making substantial cuts to public services and reducing support to families and businesses, my constituents expect banks to play their part. It must be stability and lending first, and excessive bonuses for themselves last. "

"The banks will no doubt complain, but they’ve had plenty of time to deal with the issue voluntarily and have failed to do so, so MEPs have now done the job for them."

Glenis explained that the rules will also regulate the way exceptional pension payments are used to reward bankers. She said: "In recent times there has been uproar as bank chiefs have walked away from a bank in ruins, with a £16m bonus in their back pocket. These new rules will ensure this can never happen again."