Wednesday, 27 February 2013

Bankers & the top rate tax cut

George Osborne's decision to cut the top rate of tax is the gift that keeps on giving - to Labour, in political terms, and to the very, very rich, in financial terms. Understandably then Labour is ramping up its campaigning around the cut ahead of its implementation in a month.

But there is scope to focus in on one particular group of £1m+ a year earners that will benefit - bankers. Because there is also that slow-burn policy issue of disclosure of below-board pay for top-end earners within banks. Sir David Walker - who has changed his mind on what extent of disclosure is sensible at least three times - has just announced that he wants Barclays (which he now chairs, of course) to disclose details of pay across the bank.

Be very wary of expectations management, but the Grauniad piece on this initiative speculates that this could see Barclays reveal that as many as 600 staff earn £1m+. Also in that article it is revealed that in 2011 HSBC had almost 200 staff on £1m+, whilst RBS had over 100. So we could be looking at around 1,000 people working for banks earning over a million a year. Labour estimates that there are 13,000 in total earning that much, so at a push we could be looking at 1 in 10 of them being bankers.

Obviously this needs to be treated with caution (some of those bank staff may not be paying tax in the UK?) but I reckon it is at least worthy of exploration. We could be looking at a secondary story of "Osborne gives £100m back to bankers" (£100K tax cut X 1,000 recipients).

Final thought - going back to Walker's twisting position on bank pay disclosure, he famously penned an article giving the Govt cover to back away from extensive disclosure (and just disclose the earnings of a handful of below-board high earners). If banks stuck to that it would, of course, be difficult to assess the number of bankers on £1m+. Is it too cynical to think that Osborne (who must have been planning the tax cut some way out) and his minions were aware of this, and thus this was part of the calculation in not wanting more extensive disclosure?

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