The coalition needs to address bonuses

Much ado about bankers’ bonuses this afternoon. Tim Montgomerie reports that the proposed banking deal has run aground in Whitehall. The timing is inconvenient: Cameron and Clegg are due to fly to Davos to attend the World Economic Forum. The government hopes to allay public resentment by coercing banks into increasing their lending; which is also a crucial part of its nascent growth strategy. It adds to the impression that the government is failing to make progress in any other realm than cuts.

For the time being, Tory spinners are content to distract attention by telling anyone that will listen about Ed Balls’ record on bank regulation and boundless enthusiasm for spending other people’s money. They are also quietly emphasising that banks are contributing more to the Exchequer than they have been.  All true. But it’s beside the point that Goldman Sachs paid £2.3bn in UK tax in 2010. The Tories fell for Balls’ conceits and, more importantly, the popular record holds banks more responsible for the privations of austerity than it reckless politics.