Bonus backlash: PM urged to block rail chief's payout
Cameron under pressure to axe more bonuses
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Friday 03 February 2012
David Cameron is under new pressure to intervene to halt multimillion-pound bonuses for more top businessmen after it emerged that bank and rail bosses are in line for huge top-up payments next week.
Labour is to force a Commons vote next Tuesday on a call to end the "bonus culture" at the banks. It is timed to head off plans for Bob Diamond, the chief executive of Barclays, to land a bonus in shares worth up to £10m, seven-and-a-half times his £1.35m salary.
Although Barclays is not part-owned by the state like Royal Bank of Scotland and Lloyds Banking Group, Labour argues that it was rescued by the Government's bailout during the 2008 financial crisis, which prevented the contagion spreading to banks that remained in private hands.
The Opposition is also demanding the Government blocks a controversial bonus scheme under which the six executive directors of Network Rail could win top-ups worth 60 per cent of their salary. The company receives a £4bn-a-year taxpayers' subsidy.
Sir David Higgins, the chief executive, could eventually get a £340,000 payout on top of his £560,000 salary.
This week Network Rail, which is in charge of the country's rail infrastructure, admitted health and safety breaches over the deaths of two teenagers killed at a level crossing in Essex. The rail regulator has judged the company to be in breach of its licence due to a deteriorating performance. The other bosses in line for bonuses are group finance director Patrick Butcher (who is paid £350,000), operations director Robin Gisby (£330,000), director of asset management Peter Henderson (£440,000), investment projects director Simon Kirby (£330,000), and planning and development director Paul Plummer (£310,000).
Last night Network Rail insisted "no decision has been made on bonuses" and a meeting of its 120 members a week today would "decide the shape" of a scheme aimed at improving its long-term performance. A spokesman said: "That does not mean a bonus will be paid. It will decide on a mechanism."
Labour claimed the Government could use its vote as a "special member" to try to kill off the proposal. But Justine Greening, the Transport Secretary, blamed Labour for creating a system where ministers had "no powers" to block executive pay awards at the firm. Urging the firm to scrap the bonus plans, Ms Greening said: "Network Rail needs to be responsible and exercise restraint."
Barclays may stage a pre-emptive strike against its critics by announcing that it is cutting rewards for the 24,000 employees at its investment banking unit by between 25 and 30 per cent compared with a year ago. But Mr Diamond will come under pressure to give up his own bonus as Labour tries to repeat the tactic which persuaded Stephen Hester, RBS chief executive, to surrender almost £1m in bonus when Ed Miliband announced a Commons vote on it.
In a speech in the City of London today, the Labour leader will announce the Commons debate, and say: "All companies must show responsibility but banks have a particular responsibility because they are either directly or indirectly supported by the taxpayer. We will give MPs the chance to vote on having another bank bonus tax to get 100,000 of our young people back to work. But we will also ask MPs to vote on ending a bonus culture based on one-way bets rather than genuine reward for risk."
Mr Miliband will claim the proposed bank and rail bonuses and the stripping of the knighthood given to Fred Goodwin, the former RBS chief executive, are "symbols – and symptoms – of public discontent with a system that is not working any more" for the economy or society. "This is not about the politics of envy. It is about a culture of responsibility," he will say.
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