Gordon Brown: Bailed-out banks must 'pay back every penny'

Banks bailed out during the recession will have to pay back "every penny owed to the British public," the Prime Minister vowed today.

Gordon Brown won loud cheers from the Labour backbenches at Commons question time when he insisted this was vital to help cut the deficit.

He was replying to Labour's Jamie Reed (Copeland) who said: "My constituents never shared in the bankers' bonuses, yet my constituents paid to bail out the banks.

"What assurances can you give me that they will get their money back, that we will not allow bankers' greed to threaten our core public services and that we will not squander this investment on a half-baked public share offer."

This was a reference to reports that the Tories planned to sell cut-price Lloyds and RBS shares to the public.

Mr Brown said: "We have imposed a 50% National Insurance tax on bank bonuses which has to be paid by everybody paying cash bonuses over the course of the next year.

"We have insisted on the application of the G20 rules, which means that cash bonuses above a certain amount cannot be paid and can only be paid at a later date.

"We are also working for a global banking levy where we are in discussions with other countries and making progress on how that could be administered.

"At the same time we are determined that the banks pay back every penny that is owed to the British public.

"That is an essential means by which we reduce the deficit. Any plan to give cut-price shares would mean that the deficit would be higher and the public would be denied the money they should receive in return."

In the Lords today, City Minister Lord Myners singled out HSBC chairman Stephen Green and Standard Chartered chief executive Peter Sands at question time.

Labour's Lord Sheldon, a former Treasury minister, asked him: "What is your reaction to waivers by Varley, Hester and Daniels and do you expect other bankers to follow their example?"

Lord Myners replied: "I commend those bankers who have volunteered to waive their bonus grants.

"I think the onus will now fall on Mr Stephen Green of HSBC and Mr Peter Sands of Standard Chartered to see whether they conclude that they should waive any bonus entitlement which they might be granted."