Britain and US frustrate global deal on bonus cap - World Politics - World - The Independent

Britain and US frustrate global deal on bonus cap

Opponents of pay policy say attempt to limit bankers' income would be unworkable

Attempts to clamp down on bankers' bonuses to prevent another global financial crisis were in disarray last night as Britain and America opposed proposals by other European Union nations.

Alistair Darling, the Chancellor, admitted that G20 finance ministers were so divided that they were unlikely to reach a detailed agreement on bonuses at their meeting in London, which began last night and concludes today. He expected that "further work" would be needed before G20 leaders gather in Pittsburgh on 24 September.

France led calls for a cap on individual bonuses but Britain and America, while backing common rules to prevent excessive bonuses, argued that a "pay policy" would be unworkable. They suspect that bankers would find loopholes such as incorporating bonuses into pay.

Christine Lagarde, the French finance minister, said: "They [bankers] are active participants in the economy but they are not above the rules and they should have a real interest in making sure that what we went through (the crisis) does not happen again. As far as governments are concerned, their responsibility is not to the City. It is to the public."

Seven EU countries led by Sweden, which holds the EU's rotating presidency, urged the G20 to take tough action on "dangerous, indecent, cynical and unacceptable" rewards for bankers. They want a ban on bonuses guaranteed for more than a year, arguing that bonuses should instead be paid out over a number of years and should "mirror the individual's and the bank's actual performance over time".

The plan was also backed by France, Germany, Italy, Spain, Luxembourg and the Netherlands. Sweden will increase the pressure on Britain to move towards the Europeans' stance by calling a special meeting of EU leaders a week before the Pittsburgh summit.

Hopes of a deal on bonuses appeared to rise on Thursday when Gordon Brown, the French President Nicolas Sarkozy and the German Chancellor Angela Merkel put their names to a joint letter calling for binding rules. But as the finance ministers' talks got underway, it was clear that there was little agreement on the detail – and that Britain would join the US in opposing a cap.

Mr Darling dismissed the French proposal and said of the various plans on the table: "We are ready to work with other countries but what are really focused on in this country are practical proposals that actually strike at the behaviour we would like to stop and encourage long term commitment and growth."

After talks with the US Treasury Secretary Timothy Geithner, Mr Darling made clear they wanted to link bankers' pay to long-term performance but without formal ceilings on bonuses. He said: "The United States would take the same view as we do – if you cap a bonus, all the individual needs to do is either jack up their basic salary or get paid in some other way."

However, there were signs that the G20 finance ministers would set aside their differences over how long to maintain the fiscal stimulus packages they have introduced to combat the recession.

Germany and France, which have started to return to growth, are keener to wind down their extra spending than Britain and the US. But agreement was expected today on a statement saying that it was too early to take recovery for granted and that "exit strategies" should be co-ordinated.

George Osborne, the shadow Chancellor, said: "Instead of international co-operation on bonuses we have domestic confusion. Yesterday Gordon Brown signed a letter promising to explore bonus caps, and today Alistair Darling says those caps are unworkable."

Brown vs Cameron: The view from Obama's camp

*When Barack Obama left David Cameron's Commons office last summer, 25 Tory aides lined up outside and applauded the presidential candidate. To their delight, he shook hands with them all.

Ever since Mr Obama's trip to Britain in July last year, allies of Mr Cameron and Gordon Brown have been spinning that their man is the one who enjoys the special relationship with the US President.

Now evidence has emerged that he was more impressed with Mr Cameron than Mr Brown. In a book by British-born journalist Richard Woolfe, Renegade, The Making of Barack Obama, the writer claims that Mr Obama bonded with the Tory leader and found Mr Brown dreary. "He and his aides thought [Cameron] had energy and verve ... There was a bonding ... which you would not have expected from two people at opposite ends of the political spectrum." Whereas Mr Brown, Woolfe said on BBC Radio 4, "they found very lacklustre". However, Mr Obama told the journalist that he had great respect for the Prime Minister and appreciated his policy expertise, particularly on finance and economics.

Life and Style
tech
Arts and Entertainment
Robin Thicke's video for 'Blurred Lines' has been criticised for condoning rape
music
News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
FootballFull debuts don't come much more stylish than those on show here
Arts and Entertainment
Fringe show: 'Cilla', with Sheridan Smith in the title role and Aneurin Barnard as her future husband Bobby Willis
tvEllen E Jones on ITV's 'Cilla'
News
i100
Sport
Tim Wiese
sport
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Project Manager with some Agile experience

£45000 Per Annum: Clearwater People Solutions Ltd: Our client based in Chelmsf...

Data/ MI Analyst

£25000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client are cur...

Project Manager (retail, upgrades, rollouts)

£40000 - £45000 Per Annum + benefits: Clearwater People Solutions Ltd: Project...

Project Manager (upgrades, rollouts, migrations)

£350 - £425 Per Day: Clearwater People Solutions Ltd: Project Manager - 3 mont...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week