Number 10 Press Briefing - Morning From 10 January 2011
From the Prime Minister's spokesperson on: bankers bonuses, fuel duty stabiliser, employment rights and tax rate.
Bankers Bonuses
Asked what mechanism the Government was using to make RBS aware of the Prime Minister’s views, the Prime Minister’s Spokesman (PMS) told the assembled press that he was sure that RBS would have heard what the Prime Minister and the Chancellor had said on the matter.
The PMS added that there was an established mechanism; UK Financial Investments (UKFI) had been exercising the shareholder role for the Government and they would be having discussions with RBS and he imagined those discussions were underway.
Asked whether the Chancellor would be speaking to UKFI, the PMS advised people to speak to the Treasury on that issue, but it was for UKFI to have that conversation with RBS.
On how the relationship had changed with RBS and other banks since the new Government had come in, the PMS said the approach was the same. The PMS said that more generally, since the election, we now had a Bank Levy, a statement of policy on taxation which made clear that we would maximise sustainable revenues from the banking sector, a new set of rules from the FSA on bonuses and a Banking Commission.
The PMS added that in terms of how the discussion between the Government and RBS took place, it was an established mechanism through UKFI which had been set up by the previous Government.
Asked if the Government was prepared to consider another tax on bank bonuses, the PMS replied that our policy on taxation of the financial sector was the policy set out by the Chancellor in the Spending Review, where he had said that banks should be making a fair contribution, but we should not be driving them abroad.
On whether the Government thought that the Bank Levy could raise more in taxes than a Bonus Tax, the PMS replied that the intention with the Bank Levy was to raise around £2.5bn per year. The Bonus Tax was introduced as a temporary one-off measure and if it were to be repeated, it could generate quite a lot of avoidance. The PMS said that he would not make a statement on future tax policy as that was a matter for the Chancellor.
Asked why there was a dip in revenue from the Bank Levy this year, the PMS advised people to speak to the Treasury.
Put that RBS said yesterday that the Government did not have a ‘veto’, the PMS replied that the Government had a significant shareholding and we had a significant voice when it came to having discussions with RBS.
Put that the Prime Minister had said yesterday that he did have a ‘veto’, the PMS said that a discussion between RBS and UKFI had begun and people should check with the Treasury on the precise arrangements.
Asked if it would be acceptable to the Government if Stephen Hester took his bonus fully in shares rather than in cash, the PMS replied that it would not be appropriate for him to comment on that specific issue.
Asked about bonuses being paid in shares as a general principle, the PMS replied that there were FSA rules now in place that encouraged a greater amount of bonuses to be paid in shares.
On whether he thought a Bonus Tax implemented this year would create more avoidance, the PMS said that it was a hypothetical question. One reason for making it a one-off had been that it would generate avoidance if repeated.
Fuel Duty Stabiliser
On where the Government stood on a Fuel Duty Stabiliser, the PMS replied that the Prime Minister had asked the Treasury to look into the issue. The PMS added that tax issues were decided by the Chancellor and were announced in Budgets.
Employment Rights
Asked if the review into employment rights was based on a report carried out by Lord Young, the PMS replied that it would be a review conducted by BIS as they were the department responsible. Lord Young had looked at a range of issues relating to small businesses.
We were looking at employment regulation because we wanted to ensure that it was both fair to employees but also minimised the burden on employers and encouraged them to take on more people.
Asked if there was a timetable for this, the PMS advised people to speak to BIS.
Tax Rate
Put that the Prime Minister had said that he was not sure that the 50p rate of tax would generate much money which might suggest a change was coming, the PMS replied that statements on tax policy were made by the Chancellor in the Budget.