Osborne to fight for ‘prosperity of free market’

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Chancellor George Osborne has vowed to fight an “anti-business culture”, warning the row over bonuses and pay threatens to undermine the jobs and prosperity provided by the free market economy.

The Chancellor’s comments came as Labour tried to maintain pressure on David Cameron over “excessive” City pay, using a House of Commons debate yesterday to demand a further tax on bankers’ bonuses.

Shadow business secretary Chuka Umunna dismissed suggestions Labour was being “anti-business” by focusing on the massive rewards handed out to some of those at the top of the financial sector, insisting large bonuses in banks bailed out by the taxpayer should be paid only when they reflect “genuinely exceptional performance”.

But Treasury Minister Mark Hoban told MPs Labour was to blame for an unfettered “cash bonus culture” which took hold in the City during its 13 years in power.

City bonuses tripled under Labour to £11.6bn, but fell to £6.7bn last year and are expected to fall further when banks make settlements with high-earning staff over the coming weeks, he said.

Mr Osborne used a speech to the Federation of Small Businesses to defend the principle of “rewards for success”.

He said. “Of course rewards for failure are unacceptable – and those who believe in the free market are the first to say so.

“But a strong, free market economy must be built on rewards for success. There are those who are trying to create an anti-business culture in Britain and we have to stop them.

“At stake are not pay packages for a few but jobs and prosperity for the many.”

The debate came as Royal Bank of Scotland chief executive Stephen Hester broke his silence over his decision to give up a bonus of almost £1m in shares.

In a letter to the largely state-owned bank’s staff, Mr Hester said Press coverage had been personalised and “discomforting to say the least”, but insisted RBS was “making progress in the face of a difficult inheritance”.