Answering an urgent question from his shadow chancellor Alan Johnson, Osborne robustly defended the steps the coalition has taken so far to prevent major institutions from paying out large bonuses.
He explained the new code of practice, which came into effect at the beginning of the month, ensures 50% of bonuses are paid in shares or other non-cash instruments, while guaranteed bonuses now only permissible under exceptional circumstances.
Urging banks to be “responsible” over remuneration, he said: “If the banks cannot commit to that, I have made it clear to them that nothing is off the table.”
Osborne also criticised the previous Labour government for negotiating a poor contract with RBS when it was bailed out, highlighting the failure to put any constraints on bonuses.
The Chancellor added: “Despite this we have made it clear that RBS will have a smaller bonus pool than last year and should be a back-marker in the industry, instead of the front-runner it once was.”
The government has come under attack from opposition benches for a perceived failure to live up to the promises it set out in its coalition agreement, where it stated it would take “robust action to tackle unacceptable bonuses in the financial services sector”.
