Lord Oakeshott's cute call

Lord Oakeshott is not a member of government. But he is the Liberal Democrats' Treasury spokesman and he is a chum of Vince Cable, the business secretary. Oakeshott's call for a new bonus tax on banks is, therefore, an interesting straw in the wind. Oakeshott frames his call cutely when he says he is trying to help the "responsible" bankers such as Sir Philip Hampton. That refers to the RBS chairman's comment on Monday that regulation is the only way to reduce the level of bankers' bonuses. The time for the government to make up its mind on this issue is approaching – the bonus season arrives in the new year. The prime minister says it is "intolerable" that the banks might pay out big bonuses if they are not lending adequately. That sounds like a threat to take action, but is it? Logically, there are only two possible responses for government now that bankers – and not only Hampton – have made it clear that competitive pressures make it impossible for them to stop the bonus train themselves. Either you accept life as it is and take comfort that a 50% income tax rate will apply to most payments. Or, as Oakeshott wishes, you impose a bonus tax. The Lib Dem lord is quick out of the traps – but he is right in thinking a decision has to made.