ONE of the most striking comments made during last week’s Policy Network conference at Guildhall on the Eurozone and Britain’s place in Europe was Olli Rehn’s assertion that “nobody has ever scored a goal sitting on the bench”.
In context, the European Commission’s vice president was using this football analogy to make it clear that he wants the UK to continue contributing to the debate over Europe and the Single Market as a “midfield playmaker” – rather than watching events unfold from the sidelines.
Similar sentiments were shared by other speakers at the event, including the Netherlands foreign affairs minister Frans Timmermans, Irish deputy prime minister Eamon Gilmore and EU Council president Herman Van Rompuy.
Some would argue it was ironic that this argument was being made on the same day that the European Union had scored an own goal by backing a cap on bonuses – a move that could potentially damage the international competitiveness of not just London but the continent as a whole.
Removing flexibility from pay arrangements in this highly cyclical industry would seem counterintuitive – especially if it leads to higher fixed salaries. Subsidiaries of UK banks operating internationally could be placed at a significant disadvantage to local rivals, while foreign banks will weigh the impact of this measure when it comes to investing or expanding specific business lines in Europe.
In recent years, much work has been undertaken to tie remuneration and incentives more closely to sustainable, long-term performance. This has included introducing a right of claw-back (as has been implemented at Barclays and Lloyds) payment in shares with only a limited cash element and deferred payment, and greater transparency over the packages paid to the highest earners in a business.
These reforms are already changing the culture across the industry by helping to ensure that pay reflects performance. Unfortunately this fact does not appear to have been reflected in the bonus cap deal.
Contrary to some suggestions, however, it does not signal that Britain is isolated and powerless to influence the European debate. Indeed, we recently had successful outcomes on the banking union and EU budget.
Of course, in any debate with 27 voices, there will be times when the UK, like other countries, does not get its way. But in order to get the result we all want – a Europe fit to compete in today’s global economic race – the UK has to take part in this debate and last week’s conference provided an important forum to do just that.
Or to return to the football analogy, any team out on the pitch runs the risk of conceding. But it also has the opportunity to score.
Mark Boleat is policy chairman of the City of London Corporation.