A global consensus on measures to reform the banking system is emerging ahead of next month's London summit of 20 world leaders, Gordon Brown said yesterday.
Promising to "clear up and clean out" Britain's banks, the Prime Minister gave an upbeat assessment of the prospects for the G20 meeting following his talks with Barack Obama in Washington.
At the Scottish Labour Party conference in Dundee, he outlined a four-point plan he will propose at the meeting:
*International principles to end the short-term banking bonus culture and build rewards on long-term sustainable results to influence pay;
*Bringing tax havens and the "shadow banking system" of non-bank institutions such as hedge funds into the regulatory net;
*Using international institutions to revamp the banking system in countries that cannot afford to do so;
*A better global framework for financial supervision.
Mr Brown said: "I believe there is an emerging consensus on how we strengthen global regulation of our financial markets to prevent any recurrence of the collapse that has caused so much damage to economies around the world. There is an agreement that we cannot allow the lowest common denominator approach when we need the highest standards of banking trust."
Turning to Britain, Mr Brown said: "What makes me angry is that good people, hard-working people, are being squeezed by banking mistakes and that's why we need the urgent clear-up and clear-out in our banking system."
He did not acknowledge that any mistakes had been made by Labour since 1997, despite pressure from some advisers for him to accept some responsibility for the economic crisis. He insisted that Britain had led the way in calling for reform of international institutions to oversee not just each bank but the global financial market.
"But what was outside the scope of any national regulator was that, in global markets, the failure of one bank acts like a power cut to the system as a whole," he said. "So whilst we must retain the benefits that open financial markets bring to the world economy, international financial market regulation must be toughened."
Philip Hammond, the shadow Chief Treasury Secretary, said: "Gordon Brown's call for a global crackdown on bonuses rings hollow when he's allowed Northern Rock and RBS – the banks he directly controls – to pay out millions of pounds in bonuses."