Labour grandees join the bonus bashing backlash

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"Banker and bonus bashing" by leaders of all three main political parties is undermining British business and harming the nation's image abroad, senior Labour figures have warned.

Alistair Darling, the former chancellor, and Lord Mandelson, the former business secretary, have joined an industry-led backlash against the attacks on executives in line for big bonuses by David Cameron, Ed Miliband and Nick Clegg. Political pressure forced Stephen Hester, the RBS chief executive, and directors at Network Rail to surrender their bonuses and saw Fred Goodwin, the former RBS boss, stripped of his knighthood. One senior business figure said: "Mr Cameron should show leadership and stand up for business rather than follow the baying mob, even if it makes him unpopular."

In a sign that Downing Street may soften its line, it declined to urge restraint at Barclays Bank, which is today due to announce its bonuses, including one for its chief executive, Bob Diamond, who may be entitled to a multi-million-pound payment.

Mr Darling told The Independent: "No matter what mistakes or gross errors of judgement individuals have made, we need to remember that this industry is vitally important for the whole country, not just the City of London. People are entitled to draw attention to some of the excesses and the fact that pay and bonuses don't seem to bear any relationship to results. But what we don't want is to compromise our position as one of the world's leading financial centres. The combination of what happened to Stephen Hester and Fred Goodwin can potentially be quite damaging to us."

The former chancellor, who has discussed his concerns with Mr Miliband, said the Labour leader understood the importance of a financial services industry which employs more than 1 million people. He said: "People expect certainty from the British Government. But in the past fortnight, the Prime Minister appears to be taking action on a whim. He looks like he is being blown around in the wind."

Directing his fire at all parties, Lord Mandelson said: "A pro-openness and pro-business cross party consensus has consisted under the last Labour and Tory governments and it would be wrong to put this at risk. Britain has a worldwide reputation for being welcoming and hospitable to business. In the highly competitive world we live in, that's gold dust. We will play around with this at our peril because real investment and real jobs are at stake."

Speaking in Sheffield last night, Mr Miliband hit back at George Osborne, the Chancellor, who on Tuesday criticised Labour's rhetoric. He said: "George Osborne says that action to tackle big bonuses is 'anti-business'. It is not. It is pro-business to demand responsibility at the top and an end to the something-for-nothing culture which has damaged our economy in the financial crisis at every level, wrecked businesses and left everyone else squeezed."

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