No extra tax on banks as war on City halted

DAVID Cameron has decided not to slap another tax on City pay or to introduce yet further restrictions on bonuses, it emerged last night.

Negotiations are still ongoing about a global lending target for UK banks in 2011, as well as the possibility of getting institutions to disclose more details on high earners. One option would be for the top five earners’ wages to be made public. But overall bonus levels at institutions won’t be capped.

While the development is not unexpected, the news is another blow to Vince Cable, who is waging a lengthy campaign against the City, and a victory for chancellor George Osborne.

The news comes as a group of influential MPs is planning to ambush Barclays chief executive Bob Diamond at a high-profile public hearing today, in a bid to get him to give up his bonus.

MPs on the Treasury select committee, including Labour’s Chuka Umunna and John Mann, are preparing to raise the politically sensitive issue of whether he will waive his 2010 bonus at today’s session, which begins at 10am.

City A.M. also understands that at least one MP will raise allegations that Barclays has helped its clients avoid paying UK tax.

Diamond, who is ostensibly appearing before the committee to discuss competition in retail banking, is likely to receive a bonus in the range of £5m-£10m for last year.

He could tell the committee that he intends to take it; that he will waive it; that he will donate it to charity; or that he hasn’t yet decided.

Yesterday, Umunna told City A.M. that he would ask Diamond to accept that Barclays had benefited from an implicit state-guarantee during the banking crisis.