Brown and bonuses

Gordon Brown just told Andrew Marr that there would be legislation to curb bankers' bonuses - and he implied that what he planned would be tougher on bankers and banks than what other countries were doing.

How significant is this?

Well not very, unless you think that a decision to legislate is per se of interest.

Government members tell me that a short bill - of perhaps 50 clauses - planned for later this autumn will enact what we already know to be government policy on bonuses.

And to be clear, we already knew this bill was coming. In July, the Chancellor, Alistair Darling, told the Commons that he would legislate in the autumn to give the City watchdog, the Financial Services Authority, a new statutory objective for financial stability and give the FSA assorted new powers to prevent banks taking excessive risks and to punish reckless banks.

In other words, the legislation will cover much wider ground than bonuses, picking up the urgent parts of the Treasury's recent paper on "reforming financial markets".

Also, those government members tell me that there will be no new restrictions on how and what bankers are paid that hasn't already been divulged in policy papers or official statements.

Thus, the constraints on bonuses agreed by the G20 leaders in Pittsburgh - which were less radical than some continental countries wanted but were very much the preferred solution of the UK - may be put into this bill.

In particular, ministers feel it may help to put fire into the belly of the Financial Service Authority, the City watchdog, to enshrine in law what the G20 has just agreed on bonuses or "variable compensation" - in particular the stipulation that the amount of variable compensation that a bank can pay out should be restricted to a certain percentage of its total net revenues when there are concerns that it may have too little capital, the essential buffer against potential losses.

But for the avoidance of doubt, this would be a restriction on the funds available to a bank perceived as too weak to pay bonuses, not on the size of any bonuses that any bank wished to pay to individual bankers (even the weaker ones).

Also, the recommendation of Sir David Walker - appointed by the Treasury to review the so-called "governance" of banks - that there should be greater disclosure by banks of how much they pay their top people, well that too may well be included in the new law.

In fact, the City minister, Lord Myners, has been arguing that Sir David has perhaps been a bit too timid on this: Lord Myners wants the identities of those receiving the big bucks in banks to be disclosed, whereas Sir David would keep their names secret (if they are not on the board).

And what of the prime minister's claim that the UK is being tougher on bankers' pay than other countries?

Well that seems hard to sustain. In the Netherlands, for example, a ceiling is being imposed on the absolute amount in bonuses that any particular banker can receive.

Mr Brown has no plan to impose such a bonus cap in the UK.

In other words, nothing substantially new was announced by the prime minister this morning.

Although maybe it was new to him, in that I am told the chancellor gave him a long briefing on all these already-disclosed measures on the flight back from Pittsburgh.