When George Osborne was in opposition, he made a point of insisting that the UK government should crack down on bank bonuses, whatever any other country was doing. Now that he is in power he is busily backtracking on even the fairly modest proposals by the banker's banker, Sir David Walker, that financial institutions should disclose the details of all bonuses above £1m. The Prime Minister argues that such a reform should only be instituted once our EU partners have agreed to it.
The sigh of relief throughout the City could hardly be contained. What the Chancellor's soft-pedalling on the issue actually means, as well the banks know, is that any move to lift the stone from financial remuneration will be delayed until after the crucial award season in February and March next year. The last thing the banks want is another political row as record cash extras are doled out to their traders whilst the rest of the country suffers.
That is no reason for the Government to back-pedal, however. The City may have reason to fear populist moves to "punish" well-paid employees as an act of revenge against banks for what they have done. But democratic governments also have a right to set rules which appear fair to society at large and curb practices which the public finds unacceptable.
The culture of bonuses in financial institutions mushroomed in boom times. Unfortunately, it has been sustained in leaner times, partly because the actions of governments to support the banks have sustained the very trading profits which brought the problems in the first place. They are even more justified in declaring that these rewards should be open to view from shareholders and taxpayers alike.
The threats that the best bankers will be driven elsewhere should not be allowed to block what is, in this case, quite reasonable regulation. Nor should they be taken too seriously. Bonuses have become an objectionable practice not just in this society but throughout Europe. By enforcing transparency here first, George Osborne would not be selling the pass, he would be leading the way.