Any quotes used must be attributed to Murnaghan, Sky News 

DERMOT MURNAGHAN:

Now it’s time to take a look at the business sections of the Sunday papers and I’m joined by the Lib Dem peer, Lord Oakshott, a very good morning to you Lord Oakshott.  I was saying before we came on air that really business is at the heart of politics and now you’ve got a Lib Dem business secretary right at the heart of politics, we’ve just been talking to him, Vince Cable and he has been writing in the papers and was talking to me about it, that there is something about executive pay that so many people, I think Mr Cable included, see as having reached obsessive levels of the years.

LORD OAKSHOTT:

Indeed, business and the economy has been at the heart of politics for the last few years, that’s how Vince made his name of course as the Treasury spokesman before the election.  Yes, I mean we’ve had a lot of talk about cracking down on bankers bonuses this week which we’re making good progress on but it’s not just that.  Vince is talking about top pay exploding and the average pay of a FTSE chief executive has gone from £1.25 million to over £4 million in the last ten years so they are all going … so four times, whereas the pay of ordinary workers has probably gone up 20% or something, and that’s the average. What we’re really objecting to is rewards for failure, they all get it.  As Vince says, no one minds success being properly rewarded but it’s a merry-go-round, they all sit on each other’s executive remuneration committee and they all hand each other big pay rises so Vince is going to have a proper look at this and try and make sure that the shareholders get a real say in controlling it.

DERMOT MURNAGHAN:

I was reading this and of course the shareholders already have a say, they have their AGMs and they vote on executive pay.

LORD OAKSHOTT:

Yes, but it’s all done the wrong way round, they are the ones that have to object, have to complain, it’s a sort of negative thing and I am pretty sure what Vince is thinking of, and I would certainly support, is you have a positive vote, that it doesn’t happen until there’s been a yes vote. It is very different from having to organise a revolt and that would make it easier both for small shareholders and frankly for institutional shareholders who have been pretty supine up to date but are now getting much crosser.

DERMOT MURNAGHAN:

But you’ve got to be careful, haven’t you, as a party not to send out an anti-business message because when you talk to Vince or talk to yourself it’s all about the private sector pulling us out of this economic mess and if you are bashing them and not going to reward them for success then they’re not going to perform.

LORD OAKSHOTT:

Look, I’m an investment manager myself, I built up my own business, I still run my own business so I know and no one is against, we are totally in favour of entrepreneurs, in people building up their own businesses.  The problem in the City is a lot of these people, they are almost more like civil servants, they get paid whether they win or they lose, they get a year’s payoff if it goes wrong.  We need to bring the risk back as well as the reward because that money comes out of our pension fund pockets basically.

DERMOT MURNAGHAN:

Last one on that before we turn to the banks, would it be worth legislating if you find you’re not really pushing at an open door here?

LORD OAKSHOTT:

Oh I think so.  I mean the first stage is obviously to consult and investment managers in the City are very concerned about it, they are very responsible but they don’t really have a mechanism they can properly exercise their power, so make no mistake Vince means business and if it’s not sorted out quickly voluntarily I’m sure he will want to go further.

DERMOT MURNAGHAN:

He’s go to the statute book?

LORD OAKSHOTT:

That’s the alternative.

DERMOT MURNAGHAN:

Okay, well let’s look at the banks, you mentioned there the bonuses but big numbers being talked during the past week of course, yet another rogue trader, questions about how he got away with it seemingly for so long and what it tells us still about the way banks operate.

LORD OAKSHOTT:

Oh it tells us the whole ethos of banks I’m afraid is rogue trading.  When you’ve got the boss, Bob Diamond or whoever, trousering a 20 million bonus, that culture feeds all the way down. It’s a grab what you can get culture I’m afraid in banks and that is why it’s so vital that we split off the gambling parts of the banks from the safe part and if I can read out what Lisa Buckingham in the Financial Mail says: “Rogue trader shows the need for a ring fence.”  She says the independent commission on banking, Vickers, is clearly right to recommend separation of retail and casino banking, the bankers want to continue to play Russian roulette with their own money and if shareholders are prepared to tolerate sloppy and incapable management that’s up to them but tax payers deserve the protection of the ring fence.  Or as I’ve put it in the past, if they have a gamble and it goes wrong, if Bob Diamond wins that’s fine, tails he loses, we pay. 

DERMOT MURNAGHAN:

Okay, you say there it shows we need ring fencing but of course you have seen the Vickers Commission and its report, you’ve allowed George Osborne to kick it into the long grass.  Eight years?  Eight years and none of these banks will be vulnerable.

LORD OAKSHOTT:

Excuse me, excuse me, you didn’t hear what Osborne said in parliament?  You haven’t seen what Vince said in his interview in the Sunday Times today, saying he believes it’s almost certain this legislation will be in the Financial Services Bill, that is already having previously been before the House.  The government has said they will make an official announcement before Christmas.  We would be torn to ribbons at the next election if the legislation hasn’t gone through.  2019 is a long stop date even in Vickers for the final little bits of dotting the I’s and crossing the T’s, people don’t know what Vickers actually said.  I have been doing my best last week to tell them but there is no way this will go past the election.

DERMOT MURNAGHAN:

Okay and doing your best to tell us now! 

LORD OAKSHOTT:

Absolutely.

DERMOT MURNAGHAN:

Lord Oakshott, we’ve run out of time I’m afraid, thank you very much indeed for talking us through some of the sections of the Sunday papers.

LORD OAKSHOTT:

Thank you.