George Osborne should not sign off mega-bonuses at RBS

With 81 per cent still taxpayer-owned, there is a strong argument for retaining the top talent needed to turn the ailing institution around

Share

Of all the unenviable positions in which the Chancellor may find himself, the contortions over bonuses at Royal Bank of Scotland are as challenging as any. Although a formal approach is yet to be made, executives are primed to approach George Osborne (as their main shareholder) for permission – needed under new European laws – to hand senior staff a windfall worth twice their salaries.

There are good reasons for the Chancellor to concur, not least his own fight against Brussels’ bonus cap (largely on the grounds that it will not be effective). With RBS still 81 per cent taxpayer-owned, there is also a strong argument for retaining – and encouraging – the top talent needed to turn the ailing institution around. Finally, if the bank’s case as to why such generosity is earned is compelling, then the Chancellor must surely act accordingly.

The problem here is the politics. It did not need Labour’s demand that the expected bonus request be blocked to galvanise public opinion. With swathes of Britain still feeling the pinch after five years of stagnation – much of the blame for which must fall to the banks – the spectacle of “business as usual” come bonus season would never have passed unremarked. For a Chancellor who is already, rightly or wrongly, caricatured as a “posh boy”, out of touch with normal people, the situation is trickier still.

David Cameron did his best to lance the boil yesterday, using Prime Minister’s Questions to stress that the bank’s remuneration bill will not be allowed to rise (a less meaningful pledge than it might seem, given recent sharp cuts in staff numbers) and to promise that cash bonuses will be limited to £2,000 next year (although there was no mention of share awards).

All of which only underlines the need for the state to sell its bank stakes as swiftly as possible: business should not be complicated by politics. In the meantime, however, Mr Osborne’s problematic choice remains. The politics must, in this instance, take precedence. With RBS facing yet more “substantial” losses, and still being widely criticised for its failure to support small businesses, mega-bonuses are simply not defensible, whatever RBS’s internal logic might be.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Senior SAP MM Consultant, £50,000 - £60,000, Birmingham

£50000 - £60000 per annum + Benefits: Progressive Recruitment: Senior SAP MM C...

SAP BW BO

competitive: Progressive Recruitment: SAP BW BO - 6 MONTHS - LONDON London (Gr...

HSE Manger - Solar

£40000 - £45000 Per Annum: The Green Recruitment Company: Job Title: HSE Mana...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Read Next
Tulisa Contostavlos arrives to face drug charges at Southwark Crown Court on July 14, 2014  

Tulisa might have been attacked for being working class, but she still has to take some responsibility

Chloe Hamilton
Is Ed Miliband a natural born leader? Or could he become one?  

Wanted: a leader with the strength to withstand criticism from the media

Steve Richards
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried