POLITICS

Ed Balls Rebukes Bank Of England Boss Mark Carney Over Bonus Cap

17/01/2014 15:41 GMT | Updated 25/01/2014 21:01 GMT
Christopher Furlong via Getty Images
LIVERPOOL, ENGLAND - SEPTEMBER 26: Labour's Shadow Chancellor Ed Balls addresses the Labour party conference at the Echo Arena on September 26, 2011 in Liverpool, England. During his keynote speech to delegates, Shadow chancellor Ed Balls announced a five point plan to boost jobs and economy. (Photo by Christopher Furlong/Getty Images)

Ed Balls has rebuked Bank of England governor Mark Carney for criticising the idea of limiting bankers' bonuses to the same level as their pay.

The shadow chancellor's comments comes after Labour's shadow business spokesman Chuka Umunna warned Carney against wading into "big political debates", after he told MPs that he did not back a "crude" EU bank bonus cap, an idea backed by the Opposition.

Speaking on the BBC's World At One, he said: "I’ve known Mark Carney for a decade and there’s no prospect of an unhappy relationship."

"On the issue which he raised on Wednesday, of bank bonuses, and our view that pay and bonuses, where the bonuses are more than 100% higher than the salary, he disagreed with that. On that one, I’m going to disagree with the governor of the Bank of England. I don’t think that is the right approach for bankers’ pay."

Balls also dismissed any suggestion that he was at odds with Ed Miliband as "tittle tattle", after the Labour leader failed to mention the shadow chancellor in his speech today about banking reform.

He said: "I have a very good relationship with Ed Miliband. We discussed the speech in detail for a number of weeks...I have complete confidence in Ed Miliband as Leader of the Labour Party and I am Ed Miliband’s Shadow Chancellor."

Balls' disagreement with Carney comes after Labour MPs have warned the Bank of England governor against being too biased in favour of the government.

Katy Clark, member of the Commons business committee, told the Huffington Post UK: “If Mark Carney is seen as being too party political it will not be seen as acceptable and begin over time to undermine his credibility."

mark carney

Bank of England governor Mark Carney

Michael Meacher, who was a minister for six years in the last Labour government, branded Carney a "neoliberal ideologue" who was chosen by Osborne "because he shares in spades the free market deregulatory approach to which Osborne is such a fixed adherent."

He told HuffPostUK: "This partisan and deeply prejudicial appointment to the Bank of England should be removed as soon as those who believe in the real British public interest have the opportunity to act."

Teresa Pearce, Labour member of the Treasury select committee, told HuffPostUK: "It is not surprising that a governor hand-picked by the chancellor, and rewarded with a £874,000 pay package, is not in favour of tackling exorbitant pay and bonuses in the banking sector."

"I am aware that some commentators say Dr Carney makes no attempt in private to disguise his contempt for my Party's economic credentials. However, I cannot comment on what Dr Carney does or does not say in private, as I am afraid that neither I nor my constituents, many of whom are on the national minimum wage and live in overcrowded and poor housing, move in the same social circles as Dr Carney with his £5,000 a week housing allowance."

Carney was previously accused of being "too close to the chancellor" by another Labour member of the Treasury select committee, John Mann. In response to this jibe, the Bank governor said he was "more than mildly offended" by the insinuation of political bias.

Tory MP David Ruffley, also on the Treasury select committee, dismissed accusations that Carney was biased in favour of the chancellor as "conspiracy theory".

"I absolutely reject it. His reputation depends on making the right judgements. It's all rubbish."

Speaking to Channel 4 in November, Carney rejected any suggestion he wasn't his "own man".

He said: "The great advantage of the structure that's been put in place for the Bank of England is the Governor is absolutely independent and, in fact, the other members of the Monetary Policy Committee, which set interest rates, and the Financial Policy Committee, which sets financial policy, we're all independent."