Labour can't have it both ways on bonuses Labour claims that it wants to get tough, really tough, with the City's bonus culture. Well, here's a suggestion: make Eric Joyce MP the shadow minister for banking. Why bother with moral pressure, when a boot in the balance sheet from Falkirk's fighting man would have uppity financiers on downsized salaries well before last orders? See you, Bob Diamond. Wallop! You're on minimum wage, son. It would, surely, be more effective than the party's confused policy of calling for an end to jackpot payouts, while at the same time demanding a special levy on them. Ed Miliband, it seems, is hoping that a punch-drunk electorate, still furious over bankers" greed and incompetence, won't remember how some of his front-bench colleagues behaved when in power. Far from challenging the iniquity of boardroom bonanzas, Gordon Brown regarded them as a source of easy revenue with which to bribe voters and create a client state. Alistair Darling, the last Labour chancellor, admitted to me on Sky last week: "In the old days, the Treasury used to cheer when these bank bonuses were announced." As Mr Brown's adviser of choice on tax and spend, Ed Balls was one of those who blew whistles and waved pompoms as the cash was transferred from Canary Wharf to Whitehall. This, perhaps, explains why the shadow chancellor has been so subdued recently on finance-sector incentives. Instead, the running is being made for Labour by Chuka Umunna, the shadow business secretary, who insists "the public rightly expects the culture of excessive bonuses must stop," and Rachel Reeves, the shadow chief secretary to the Treasury, who proposes to fund job creation for young people with a tax on - you've guessed it - bankers" bonuses. Incoherence, even in opposition, is an unaffordable luxury. They can't have it both ways. So, which is it? "A change in the bonus culture across all our banks," as Ed Miliband demands, or an acceptance that the warmth of self-righteousness from capping City bonuses would soon become a chill in the Treasury when officials worked out the full horror of lost tax revenues? For those who espouse greater equality of income, it's an uncomfortable fact that the top one per cent of earners pay nearly 27 per cent of the United Kingdom's total income tax. For the top five per cent, the income tax contribution is 45 per cent. In 2006, the last full year before the credit crunch, the banking sector paid £40 billion in direct and indirect taxes, more than the defence budget at that time. It's perfectly legitimate for Mr Miliband to demand a reduction in the clout of our financial services industry and a diminution of the top-end bonuses it generates, but he cannot do so and hope to establish economic credibility without costing the impact and explaining how the shortfall in government income would be managed. Higher taxes elsewhere? Fresh spending cuts? It's all very well being a champion of redistribution, but in order to share out the sweeties there has to be a goodie bag with sufficient capacity to meet the state's welfare ambitions. Does Mr Miliband have cunning plans for diversifying our industrial base in speedy fashion and creating new enterprises that will challenge the digital wonders of America and Asia? If so, it's about time he shared them with us. Because at the moment he sounds suspiciously like a chancer, hitching a freebie on a populist bandwagon, who prefers the comfort of vapid sound bites to the inconvenience of setting out a credible budget for a heavily indebted nation. Bear this in mind when HSBC, Britain's biggest and most successful bank, today announces annual profits of £14-15 billion. This is a company with roots in the Far East going back to 1865 (it was founded as the Hongkong & Shanghai Banking Corporation). HSBC is a global business that does not need to be located in London. Its 2011 interim results showed that just 18.5 per cent of earnings came from Europe, of which the UK provided less than half. Last year, HSBC paid 253 staff more than £1 million each. The highest-remunerated employee received £8.4 million. The bank's chief executive, Stuart Gulliver, earned about £6 million. Personally, I'm not offended by these huge sums. I have no idea if their booty can be justified in terms of value added, but if the shareholders are happy, who am I to complain? I do, however, have a vested interest in where and how much tax these people pay. My strong preference is that as much as possible goes to the UK Exchequer. I like the idea that traders in oil futures or currency options are, albeit unwittingly, funding a children's hospital. This will not happen, however, if bonuses are, in effect, banned, or recipients treated like economic lepers. Neither is leaving the money inside the company a guarantee that the bank will become more stable: it merely invites shareholders to take bigger dividends. Nothing wrong with that, except in the case of HSBC and Barclays more than 50 per cent of the banks" investors are based overseas. Thus half the payout would end up in foreign accounts. As Eric Joyce has discovered, squaring up to those with whom one has philosophical differences doesn't always produce the right result.