Feeds

Unions and small biz doubt Osborne's bank promises

Show us the money, Gideon

Top 5 reasons to deploy VMware with Tegile

The Trades Union Congress and small business groups are doubtful that George Osborne has tamed the British banks or extracted a meaningful promise on business lending.

Osborne made clear that his Project Merlin, the deal done today – a £2.5bn tax on bank profits, a pledge to increase small business lending and reduce bankers' bonuses – was not an attempt to pre-judge the final report of the Independent Banking Commission chaired by Sir John Vickers, due later this year.

The chancellor said the banks had promised to reduce bonus payments and to inform the public on what bonuses are actually paid out.

Osborne said the UK's four biggest High Street banks – HSBC, Barclays, Royal Bank of Scotland and Lloyds Banking Group – had promised total bonuses will be less than last year's £11.5bn. The banks have agreed to get sign-off from their remuneration committees for payments to their top 10 earning staff in each business unit. Banks also agreed to reveal the pay of board members and the top seven earning staff not on the board.

The two banks owned by British taxpayers – Royal Bank of Scotland and Lloyds – have agreed to limit cash payments to £2,000 per person, executive bonuses will otherwise be paid in shares – which won't be sellable until 2013.

To improve small and medium business funding, the big four banks – along with Santander – have promised to increase lending from £66bn last year to £76bn this year. This represents a "massive 15 per cent increase", says Osborne.

Lending to all businesses will increase from £179bn to £190bn. Osborne also said that for the first time the pay of chief executives, and other relevant senior staff, will be "linked to performance against the SME lending targets".

TUC General Secretary Brendan Barber said: "Project Merlin has failed to live up to its low expectations and isn't even a worthwhile PR stunt.

"Banks will only act against their own commercial instincts if there is a credible threat ... With government cuts hitting business and consumer confidence, it's hardly surprising that banks don't want to lend."

Meanwhile, the Federation of Small Businesses said more needed to be done to change the structure of banking in order to promote growth. It said it still wanted to know how performance metrics would be measured, and how far the banks could miss targets by before they were punished.

The group also said it was concerned that £1.5bn promised to the Business Growth Fund was only for equity deals of between £2m and £10m – so not much good for smaller firms.

The FSB also noted that 84 per cent of its members do not go to their bank for credit either because they've already been refused or because costs are too high.

Osborne's bank speech is here. Let us know what you think by posting a comment below. ®

Internet Security Threat Report 2014

More from The Register

next story
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
BT said to have pulled patent-infringing boxes from DSL network
Take your license demand and stick it in your ASSIA
Right to be forgotten should apply to Google.com too: EU
And hey - no need to tell the website you've de-listed. That'll make it easier ...
prev story

Whitepapers

Designing and building an open ITOA architecture
Learn about a new IT data taxonomy defined by the four data sources of IT visibility: wire, machine, agent, and synthetic data sets.
The total economic impact of Druva inSync
Examining the ROI enterprises may realize by implementing inSync, as they look to improve backup and recovery of endpoint data in a cost-effective manner.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Business security measures using SSL
Examines the major types of threats to information security that businesses face today and the techniques for mitigating those threats.