It is bonus season in the banking sector, with billions expected to be paid – including to banks bailed out by UK taxpayers. This week Barclays boss Bob Diamond sought to justify them at the Treasury select committee. Mark Littlewood, libertarian head of the Institute of Economic Affairs thinktank, believes Diamond and his ilk are entitled to their colossal remuneration. Labour MP Diane Abbott, whose Hackney constituency borders the City of London, thinks the opposite. Susanna Rustin sits in on an the argument.
Mark Littlewood: I am extremely relaxed about high-end pay for bankers and I am concerned that politicians are demonising this profession. And I favour people being paid a substantial part of their income as a bonus, whether that's a £10m salary and £10m bonus, or a £20,000 salary and a £20,000 bonus.
Diane Abbott: If Mark's not concerned about the bonus culture in banking, he clearly doesn't know much about the financial services industry and what were the underlying causes of the credit crunch. One was poor regulation – and as a politician I put my hand up. Another was the emergence of an international casino that was trading in what they now call toxic assets, but which were financial instruments that represented debt. The third reason was these huge, year-on-year cash bonuses that incentivised bankers not to look at the long-term sustainability of their banks or even the British economy, but at the short-term earnings of their bank. And the taxpayer had to bail them out.
Read the rest of the interview on the Guardian website.