Gordon Brown wades into bonus controversy

Gordon Brown has joined the debate on the City bonus culture, even as Lord Turner, head of the Financial Services Authority, has been forced to defend his position advocating a so-called 'Tobin Tax', which would see City firms pay extra tax, reducing the amount set aside for bankers' bonuses.

In an interview with the Financial Times, the Prime Minister suggested that bonuses should be aimed at ensuring long-term success, rather than short-term gain and also advocated the "clawback" of bonuses if the banks which made the pay-outs performed poorly in the future. His comments come as the upturn in the financial markets leads to renewed payments by City firms.

Brown said: "I understand all the difficulties because we're dealing with very many global financial centres, but I think you've got to be absolutely clear that remuneration has got to be based on long-term success, not short-term speculative deals. There's got to be a clawback system in remuneration itself, so that if things are not working in year two then there is a clawback that is possible."

His words will worry many in the City who are opposed to bonus reform, and they come ahead of a G20 meeting later this month at which the issue is due to be debated. However Brown did seek to distance himself from Lord Turner's opinion that the financial sector was "socially useless".

WHAT THEY ARE SAYING:Philip Stephens in the Financial Times: "Even as they stash away this year's bonuses, the bankers are betting that politicians and regulators will bow before demands that they protect London’s “competitiveness”. I fear they may be right. Lord Turner, though, has at least mapped out an alternative. Just what do the banks offer the rest of society to deserve those vast profits?"

Bill Emmott, in the Times: "The trouble is that governments face big conflicts of interest in tackling this issue. Having semi-nationalised many big banks, they are quite happy to puff up the banks' profits both to cut governments’ own short-term losses and to inflate the value of their assets for when they reprivatise them. Ministers may fulminate against bankers’ bonuses, but they have their own political and financial bonuses to think about too." ·