Government will not intervene on RBS bonus payments

Posted on January 31, 2012

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written for New Statesman – words by Robert Pollard

Downing Street says “We are not going to micro-manage bonuses”.

David Cameron will not force any RBS executives to turn down bonus payments, despite growing calls for government intervention on executive pay.

On Sunday, RBS chief executive Stephen Hester announced that he will not be accepting his proposed £963,000 bonus after pressure grew for him to decline the award.

A spokeswoman for Downing Street said:

We are not going to micro-manage bonuses. They are doing a good job and making good progress.

The prime minister’s view was that he wanted the bonuses to be lower.

He always made it clear that it was a matter for Mr Hester whether he took that bonus or not, and that should remain the case. Reward for good performance is not in itself a bad thing.

Before Hester’s decision was announced, Labour MPs had threatened to force a commons vote on the issue. Ed Miliband has now said it should not be a “one-off episode” and that the government needed to make “real change” to the bonus payment system, calling for workers at every company to have a say on the pay of the top earners.

I think it is right that Labour had the parliamentary vote and I think that it was the threat of that parliamentary vote that led to change.

But I don’t think this can be just a one-off episode, because if we don’t deal with this systematically, if we don’t deal with the issue of bankers’ bonuses in a proper way, this kind of thing is just going to re-occur.

This isn’t the best way of setting the pay for top chief executives, let’s be honest about it.

That is why we need real change – real change in the boardroom and new rules and real change from the Government to say tax the bankers’ bonuses until we see the change in behaviour that we need.

This issue has become party political in recent months, with Labour continually challenging the government’s position in order to appear tough on executive pay. However, it seems that government are not keen to intervene and are instead happy to let individual companies set bonus levels.

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Posted in: Business, Politics