BANKERS’ CONTRACTS will be torn up if they reward excessive risk-taking, British prime minister Gordon Brown said last night, insisting that financial markets would have morals imposed on them by society.
“We will not hesitate to give the financial services authority power to quash bonuses if it encourages reckless behaviour,” said Mr Brown at the Royal Institution in London.
In a criticism of the Conservatives, Mr Brown warned of the dangers of “a double-dip recession” if the Government’s effort to stimulate the economy are withdrawn this year.
The third day of campaigning was largely taken up by the continuing row over Labour’s plans to increase national insurance rates from next April, which the Tories say they would not implement totally.
Ironically, one of those invited to the Royal Institution "GB: On The Road" event was entrepreneur and Dragons' Denstar James Caan, who earlier had joined a chorus of business leaders opposing the move.
The Conservative Party’s promise to halve the rise in national insurance contributions is not credible, said chancellor of the exchequer Alistair Darling, because the money could not be replaced.
This row has caused major difficulties for Labour. Business leaders have been furious over Gordon Brown’s charge that they had been “deceived” into backing the Conservative plan.
Currently, every worker earning more than £5,700 pays an 11 per cent levy on everything above that up to a limit of £44,000, after which a 1 per cent levy is imposed.
Both Labour and the Conservatives propose to raise the tax to 12 per cent, but Labour would start deductions at £7,000 and the Conservatives at £8,000.
Under Labour’s plan, anyone earning more than £20,000 would pay more, while under the Conservatives’ proposal they would not do so until they had earned £35,000.
The backing from leading City business figures has delighted the Conservatives, though the admission by the most high-profile executive, Marks and Spencer boss Stuart Rose that he favours a VAT rise instead is likely to be seized upon by Labour.
Questioned about his attitude to a VAT increase, Mr Rose, speaking on BBC, said: “Listen as a retailer, I’m not going to vote for VAT going up. But as a citizen of the UK, if this is something we need to do, then yes.
Mr Darling said the Conservatives are claiming that they can ease national insurance payments by making £12 billion extra “efficiency savings” in addition to £15 billion already planned by the government for this year.
“If I had announced such an uncosted giveaway in my budget two weeks ago, and was unable to show how I would pay for it, people would rightly say I am not credible,” Mr Darling said.
“What [the Conservatives have] proposed is simply not believable. What is clear is that, having spent the last year saying cutting the deficit is their number one priority, the Tories have thrown caution to the wind and gone for broke.” Mr Brown, seeking to defuse the row with business leaders, said Labour is “not in a fight with business”.
“You cannot effectively get £27 billion of savings in one year . . . without laying thousands of people off and without causing losses of business and loss of jobs. It is not possible.”