Monday, January 30, 2012

Labour need bank bonuses to make their "policy" work

Labour's suddenly discovered hostility to bank bonuses, highlights the chaos into which Labour policy has descended. I am not referring to their 13 years in government in which they actively encouraged the bonus culture. Instead, I am referring to the so-called "Five Point Plan" to solve all the country's ills. I have blogged before about how feeble and back-of-an-envelope this "Plan" is. It is based on a £2 billion bank bonus tax which, Labour claims, will pay for a house building scheme with will solve the housing crisis (which they allowed to get worse in government), take 100,000 young people off the dole (after leaving nearly one million on the dole themselves) and generally will pay to reverse any cut they don't like, even though they are now supposed to be all in favour of these cuts.

None of Labour's figures stack up. The scheme would cost more than four times the money raised to pay for it. But at this moment, that's not the point. The reality is that if Labour is to stand any chance of making their scheme achieve even a fraction of what is claimed of it, bank bonuses will have to be paid big style so that they can be taxed. This £2 billion is a great deal of money but Labour can't have it both ways - arguing for lots of tax to be raised from the banks when bonuses are paid and then in the next tv interview, arguing for an end to bank bonuses. The reality is that Labour policy rests on big fat bonuses being paid by the banks. You can't kill the goose that is laying the golden eggs and then demand the corpse of the goose continues laying!
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