Jonathan Hill, the European commissioner-designate for financial services, will not be responsible for banker’s pay. Instead, this will instead be dealt with by Věra Jourová, the nominee to become commissioner for justice, consumers and gender equality.
This has attracted attention in recent days, as some have questioned whether the issue was taken out of Hill’s portfolio because the UK opposes the cap on bankers bonuses adopted last year. On Friday (26 September), a spokesperson for Jean-Claude Juncker, the president-elect of the European Commission, told reporters that the decision not to include the bankers bonuses issue in the financial services portfolio was taken well before it was decided that the portfolio would go to Hill.
That Hill will not have responsibility for bankers’ pay will be interpreted in some quarters as a setback to the UK. The finance minister of the UK, George Osborne, has strongly opposed the EU’s laws regulating bankers’ pay and had hoped, so the arguments runs, to rein in its effects. Michel Barnier, the current European commissioner for the internal market and services, is urging the European Banking Authority to crack down on banks that use allowances to get round the bonus restrictions.
Member states reached a deal on limiting bonuses last year, outvoting the UK. The legislation will take effect early next year, looking back on the bankers’ performance in 2014. Its implementation will be monitored by the Commission.
There is more to the question of what Hill’s responsibilities are (or are not) than simply whether or not the UK is to get its way. There are messages too about Jean-Claude Juncker, the president-elect of the European Commission, and how he and those close to him will be running the next college of commissioners.
First, note that the ostensible reason why Hill will not be responsible for bankers’ pay is that the unit for company law which is currently to be found in the Commission’s department for internal market and services is being transferred to the department for justice. Therefore, the company law unit will come under Jourova.
The lesson is that the alterations that Juncker announced three weeks ago about the structure of the Commission have potentially far-reaching consequences. Some of them have already been much discussed – the switch of responsibility for medicines from the department for health and consumer policy to the department for enterprise, for example – but the significance of others will emerge more slowly.
A second lesson is that Juncker and his team are prepared to be more proactive than their predecessors in ensuring that the Parliament gives a positive endorsement of the proposed college.
Back in 2004, José Manuel Barroso put too much faith in Hans-Gert Pöttering, the then leader of the centre-right European People’s Party, who assured him that his college would be approved. The rank-and-file MEPs proved more recalcitrant than Pöttering was expecting: two nominated commissioners were withdrawn and replaced and two portfolios were switched.
Barroso was forced into retreat again in 2010 when the Bulgarian nominee Rumiana Jeleva failed to convince at the hearings.
This time round, it seems, Juncker’s team will be quicker to head off any incipient rebellion – whether by counter-argument or by making concessions to the Parliament. At any rate they will not make the mistake that Barroso-Pöttering made: leaving a vacuum.
The information that Hill will not be involved with regulating bankers’ pay takes away some of the pressure that was building up, particularly on the side of the centre-left, to pick a fight with Hill as the embodiment of Anglo-Saxon capitalism and the City of London (still a useful scapegoat for some of the pain of the economic downturn).
The Juncker team now has to move quickly to defuse questions about Miguel Arias Cañete, Spain’s nominee for the European Commission and a former agriculture minister. Yesterday, after revelations about his and his family’s shareholdings in energy companies, Cañete made a declaration rejecting accusations that as a minister he had made decisions involving any conflict of interest. The Spaniard has the weight of the EPP behind him, but if significant doubts persist elsewhere in the Parliament, do not expect Team Juncker to sit idly by.
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