Hain: "surrender your bonus - or else"

The Sunday Telegraph reports that Peter Hain believes companies should donate two thirds of their bonus pools to the poor and needy. In fact, if they don't come to a consensus, he said (i.e. give in to his demands), or "people would look for other solutions". Hmmm... given that all big City bonuses are paid to people who are already higher rate tax payers, HM Treasury already collects 40%. If the remaining 60% is spent on property, a further 4% of Stamp Duty Land Tax is payable. If it is spent on most consumer items or services, 17.5% goes on VAT, not to mention the tax paid by the suppliers of those goods and services. Funnily enough, he didn't mention anything about football clubs paying two thirds of their players' salaries to charity.

We've obviously taken a few steps back since Peter Mandelson announced in 1998 that New Labour was "intensely relaxed" about people getting "filthy rich". Or is Peter Hain just not New Labour any more?

It probably doesn't matter since they are all yesterday's men, but really worrying was this paragraph in the ST report: "It is understood that the Tories were also risking an intervention, with plans for David Cameron to make a speech exhorting bosses to clamp down on bonuses, although stopping short of threatening legislation."

Calls for pay restraint from Cameron? Whilst I can tolerate his hug-a-hoodie-and-let's-all-get-a-wind-turbine mantra as being the right medicine for the Conservative Party, I hope he remains firm on basic economics. The people collecting these bonuses are an international lot. Most of the work could be done in another country without restrictions, be they legal or moral, and either introducing limits or punitive rates of windfall tax on bonuses would just push this work, or the compensation structures, offshore.

But in a related ST op ed piece, Patience Wheatcroft sides with the wets, saying:

"Armed with this excess of cash, these jackpot winners have been pushing up the prices of London houses and palatial country homes, encouraging restaurants to believe that there is no limit to what they might charge, and helping to push art prices through the roof. They have created conditions in which the green-eyed monster was almost bound to put in an appearance. For while they enjoy boundless riches, the rest of the country is feeling the pinch. A survey from Legal & General this weekend shows the proportion of people saying that they have nothing left to spend at the end of the month, after paying household bills and debts, is now higher than at any time in the last three years. Rising tax and utility bills take an increasing slice of incomes, and higher interest charges add to the pain."

Well, yes, these bonuses probably mean I cannot afford to spend the rest of my life living in a house in K&C but if I were to sell up I could have a lot of fun/school fees out of the proceeds. But how a few thousand people getting bonuses affect gas prices is beyond me. If anything big bonuses mean a higher tax take for HMT which should mean a lower tax burden in due course for the rest of us (fat chance, I know), and a stable economy which can produce these bonuses should result in lower interest rates, although Gordon Brown seems to be cocking that one up as well....