Alistair Darling will race through legislation to put an “end to automatic bank bonuses”. he confirmed today.
Speaking at the Labour Party Conference in Brighton, Darling said the new Business and Financial Services Act would be included in the Queen’s Speech in November.
Darling told the conference: “Let me assure the country – and warn the banks – there will be no return to business as usual for them. So in the next few weeks we will introduce legislation to end the reckless culture that puts short-term profits over long-term success.
“It will mean an end to automatic bank bonuses year after year. It will mean an end to immediate pay-outs for top management. Any bonuses will have to be paid over years, so they can be clawed-back if not warranted by long-term performance.”
In his speech Darling also re-iterated Gordon Brown’s pledge that public spending cuts would not affect frontline services, and that the government would look to draft a Fiscal Responsibility Act to address deficits.
The budget deficit is forecast to reach £175bn this year, more than 12% of GDP. Business groups have demanded that whichever political party is in charge next year, action must be taken immediately to address growing debt.
Darling said: “Tighter spending doesn’t mean a return to the Tory dark ages. It does mean a determination to cut waste, cut costs – and cut lower-priority budgets. This will require difficult decisions. I haven’t shirked them in the past and I won’t shirk them now.
“We must keep the public finances on a sustainable path. That is why we will introduce a new Fiscal Responsibility Act to require that the government reduces the budget deficit year on year.”
The chancellor added action already taken by the government during the recession has meant more than half of those who lose their jobs now come off Job Seeker’s Allowance within three months, and almost three-quarters within six months. The guarantee for 18 to 24-year olds of work or training after they have been unemployed for 12 months has already succeeded in creating 47,000 jobs, he said.
Meanwhile Yvette Cooper, secretary of state for work and pensions, told the conference Labour will triple the number of people who secure employment through Local Employment Partnerships (LEPs).
She said: “I can announce today that we will expand those successful local [employment] partnerships to help far more people. Already they have helped over 250,000 people into jobs. Now we will treble our original plans to help a total of over 750,000 people into jobs by the end of next year because no one should be denied the dignity of work.”
She added getting people back into work would help the government to address the public finance deficits by reducing expenditure on benefits.
“For every 100,000 people we get off unemployment we save £700m,” she said. “There is no better way to cut the deficit once the economy is growing than to get people off benefit and back into work. That is why we will make sure no one is written off.”