Peter Hoskin

Clegg turns his attention from the students to the banks

Clegg turns his attention from the students to the banks
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'Tis the season to bash a banker – or it is if you're a Lib Dem, at least. After the stresses of last week, Nick Clegg lets off steam with an aggressive interview in the FT. "They don't operate in a social vacuum," he says of the City's moneymen, before seething that, "it is wholly untenable to have millions of people making sacrifices in their living standards, only to see the banks getting away scot-free." He even suggests that the government should consider a one-off bonus tax, like that introduced by Labour last year.

 

Will anything come of it? On the evidence so far, probably not. The coalition – from Vince Cable to George Osborne – has certainly not shied away from tough rhetoric on lending and bankers' bonuses. But it has found it difficult to move much beyond that. Part of it is a reluctance to wade into the affairs of the state-owned banks. But the real problem is that the government has so few policy levers at its disposal. It can only really engage in uncertain trade-offs with the banks; like not hiking up taxes in exchange for loose pledges on lending to small businesses. Which is more informal, and less decisive, than many in government would like.

This is far from ideal for the Deputy PM. He may wax furious now, but unless something anything actually happens, then he could just be setting himself up for more attacks from the left of his party. Perhaps the expected drop in bonuses next year (as a result of smaller profits this year) will extract some heat from the situation. But still expect this to be another testy problem for the coalition in 2011.