Darling: bankers bonus cap 'not practical'
Updated on 04 September 2009
Chancellor Alistair Darling tells Faisal Islam that a cap on bankers' bonuses is impractical - a day after his Prime Minister Gordon Brown called for one to be looked into.
There's confusion about what the government thinks should be done about controlling bonus payments at the big banks.
Yesterday, the prime minister appeared to back Franco-German plans for some form of cap on the amount that can be paid out in bonuses.
But tonight, the chancellor has dismissed the idea, saying it is not practical.
Our Economics Correspondent Faisal Islam spoke to the chancellor earlier, who said:
"There's two things that you got to get right here. Firstly it has got to be a global solution, because all these banks that we're talking about trade in different parts of the world - it's too easy to play one country off against another. It just won't work unless it's global.
"If you take something like capping a bonus. All they have to do is raise the basic salary or arrange for a payment to be made in another way.
"So I personally don't think it's practical, which is the second element for any set of proposals that you want to make.
"What we want to do is that I think banks themselves actually have it in their own hands to solve some of these problems - by saying for goodness sake be reasonable. Try the next door neighbour test -and hope your next door neighbour isn't a highly paid banker.
"Ask yourself is this a sensible thing to be doing? That's the first thing.
"But I'm afraid we need to back that up with a robust regulatory regime to make sure that we don't get ourselves into a situation where people are being paid in a way that actually encourages them to take risks that could have very, very dangerous consequences… "
