Page last updated at 17:42 GMT, Saturday, 7 February 2009

Inquiry into City bonus fairness

Harriet Harman
It is thought the government may crack down on city bonuses

The leader of the Commons has asked the Equality Commission to examine City bonuses and rule whether they discriminate against women.

Harriet Harman told a Labour regional conference in Sheffield that men working in the finance sector are paid over 40% more than women.

In her speech, Ms Harman described the bonus system as a "licence for unfairness and discrimination".

She believes action must go beyond existing bans on board-level payouts.

Ms Harman said: "We don't have to choose between a strong economy and fairness - we must have both. And that includes fairness in the financial services sector.

"There is something rotten in the remuneration system of the banks and finance companies. Men paying themselves millions of pounds of bonuses each - and then saying that they didn't know what was going on."

She denounced what she called an "old-boys' network" paying itself millions amid financial turmoil.

'Unfairness and discrimination'

"Half the employees in the finance sector are women. Yet the men are paid 40% more than the women employees.

There will be no board level bonuses in the banks where the public purse has stepped in to secure their future
Harriet Harman, leader of the Commons

Announcing the inquiry, she added: "The discretionary bonus system is a licence for unfairness and discrimination.

"And is anyone any more going to justify a system which allows for the old boys' network to fall back on a financial cushion of millions of pounds while helping cause the problems which make others struggle?"

She added: "The Financial Services Authority (FSA)... is also conducting a review into bonuses. Because they will need to stop the bonus system encouraging those at the top taking risks with everyone else's money.

"It's right that those who've left the RBS have done so without 'severance pay' and that there will be no board level bonuses in the banks where the public purse has stepped in to secure their future."

Payments cap

There is speculation banks are attempting to rush through bonuses for thousands of high-earning staff before an expected government crackdown.

This week Prime Minister Gordon Brown said any payments at Royal Bank of Scotland, which is now 68% taxpayer-owned, must reflect the economic conditions and the bank's performance.

US president Barack Obama has proposed a $500,000 (346,450) cap on payments to American bank executives who participated in the US bailout.

This has sparked speculation that a similar deal may be pending in the UK.



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