RBS bank bonuses an open goal for Ed Miliband

Jan 15, 2014
The Mole

Osborne wants RBS to keep its best people – but risks claims that Tories 'stand up for the wrong people'

Dan Kitwood/Getty Images

LABOUR has a bad record on allowing excesses in the banking sector, but the issue of bankers' bonuses is an open goal for Ed Miliband, who is to challenge David Cameron in the Commons today over whether he is on the side of his friends in the City or the rest of the country who, in the Miliband mantra, face a cost-of-living crisis.

Labour is calling on the Chancellor George Osborne to use his 81 per cent shareholding in Royal Bank of Scotland – bailed out by the taxpayer - to reject any request by the bank to give its most senior investment bankers bonuses in excess of 100 per cent of salary.

At the last count – in 2012 – RBS had 93 bankers on its payroll earning more than £1m a year. That number is expected to have shrunk, according to the Financial Times, as RBS has reduced the scale of its investment banking.

Even so, it's a lot of taxpayer money at stake and Miliband plans to maximise the embarrassment of the government by forcing a Commons vote this afternoon to oppose excessive bonuses. Cameron can also face a pounding over the issue at Prime Minister’s Questions.

The issue has come to a head now because January is the traditional time to pay bonuses and because George Osborne is actually fighting an EU cap on bonuses from 1 January. It prevents bonuses of more than 100 per cent of salary being paid without the approval of shareholders. Even with their approval, the maximum is 200 per cent of salary.

As the FT reports, "The Chancellor, who is challenging the new bonus cap in the European courts, wants to ensure that RBS is competitive and does not lose important staff to rivals. But Mr Osborne knows that sanctioning big bonus payouts will play into Labour’s claim that the Tories 'stand up for the wrong people'."

RBS has so far made no formal application to the government, as the main shareholder, to break the cap, but is expected to do so.  

Chris Leslie, a Shadow treasury minister, said on Radio 4's Today programme: "Isn’t it amazing we are still talking about a Chancellor who is refusing to stand firm to the banks and say, 'Enough'. We cannot continue with business as usual any longer. We have to make sure we move away from the high-risk, high-reward bonus culture which has caused so much devastation.”

Meanwhile, that old warhorse Lord Prescott is leading a Twitter campaign against the bonuses. He tweeted: "Last time George Osborne went to Europe he tried to stop bankers' bonus cap.  He was in a minority of 1.’

All this helps tee up the issue of banking for Miliband before his keynote speech on Friday when he is due to lay out Labour's plans for more competition among high street banks. Proposed reforms are expected to include a cap on any bank's market share, possibly to be set at 25 per cent.

Leslie said: "We have a situation where a lot of customers feel what is the point of switching – they are all the same. You are more likely to get divorced than change your bank."

Sign up for our daily newsletter

Disqus - noscript

Only it isn't an open goal, because the goal doesn't actually exist. RBS has made no statement regarding doubling bonuses, and it's another crisis Miliband has created to cover up the fact the last crisis he invented has melted away. There's a pattern with Miliband led Labour, and I'm reminded of the boy who cried wolf.

Rubbish. Ed Milliband is right to highlight the greed and excess of these people, who have been allowed to get away with murder. Why is no one in prison?
Regardless of whether Labour got it wrong on bank regulation, the Tories, lest we forget, opposed ANY regulation at all. Now they're in power, they can suck up to their rich paymasters, and wave two fingers to the rest of the country, who do proper jobs that actually improve peoples' lives. Most bankers and Tories would not recognise a proper days work if it got up and bit them, yet they still expect the money to come rolling in. Didn't a gorilla with a pin out-perform an investment banker?

You know what, I think you need a little lesson in exactly what happened with a sense of the timeline, so we can cut the propaganda (excuses) led by Labour.
In 1997, Brown set up his tripartite system of financial regulation. He spread responsibility instead of between the BoE and what was originally the Securities and Investments Board (became the FSA in Oct 1997), responsibilities were poorly divied up between the BoE, the FSA and the Treasury.

It turned out, that the Treasury had the whip hand, and banker lobbying never got regulation reduced, they got it ignored instead. Well Brown and Balls, soon realised that turning a blind eye made the treasury a lot o money, and British banks started buying up half the worlds banking system. In Washington, this led to pressure for Clinton's government to abolish the Glass-Steagall Act, so NY could compete better with London. So in 99, just before Clinton left office, the GSA was repealed. You can guess what happened from then on.

When the crash hit, there were 10,000 pages of regulations for the financial sector. about 4,000 more than in 97. The only industry with more regulations was the nuclear industry with about 12,000 pages. The problem with having a lot of regs, is bureaucrats can't manage them and everything falls apart because nobody has a clue who's responsibility what is, with overlaps all over the shop and human's natural ability not to want to tread on others toes, and maybe leaving responsibility to others when they could.

So what soup did we have? A burning pot ready to boil over, and boy it did. So to sum up, politicians saw their treasuries full to brimming, and economies going full guns. Only Brown just let it all drift, created a very bloated state that couldn't be afforded without the huge banking royalties he considered would be there forever. ("I have abolished boom and bust") A telling statement!

As for our Ed? He was right there with Balls and Brown, central to strategy and oversight. So for him and Balls to lecture those that are fixing their mess the way they are, and making up headlines to hide his previous failed faux crisis is frankly risible. There maybe many people with a lot to moan about banks, but they should first look to politicians, and specifically, Milliband Balls and especially Brown who Miliband worked for. You can check my facts, my timeline and context. I think you'll find I'm correct. ;)

Let's unpick what you have said. Labour came to power and inherited an economy that had been run for the few. They saw a problem with the banking industry, and regulated to prevent a collapse. Surprise, surprise, bankers, like most tories, believe regulations that prevent them doing what they want,( as with the hunting laws) are for the 'little people', and can be ignored.
They proceeded, helped by their tory chums, to trash the economies of the western world whilst enriching themselves at the expense of the rest of us.
So far, as I said, no one in the UK is in prison, and banks have continued on their merry way whilst thumbing their noses at anyone who can see that their activities are unsustainable, immoral, and indefensible. The latest scandal. of RBS apparently causing companies to fail so that they can make a packet from their assets, is just a further example.

You fail to appreciate that experience can lead people to recognise that previous regulations were as you say, unwieldy and not properly enforced. That does not mean that another initiative is bound to go the same way, indeed, the best experience is usually the hardest won. I don't expect Milliband has any illusions about the task of properly regulating the financial industry, given the web of old boy networks, freemasons, and boys clubs he faces, but anyone with an ounce of common sense can see that what has happened once, will inevitably happen again unless something changes. As it appears nothing has yet changed, how long before we get another crash, probably worse than last time.
The prospect of an economic illiterate like Osborne having to deal with another crash is the stuff of nightmares.

Utterly clueless party political propaganda and nothing more. Frankly, you don't understand anything of which you speak, as for assessment others economic competence, the facts speak for themselves.

The left need to up and accept responsibily rather than shift it to others all the time.

Oh, dear, what an unpleasant post, sounds just like Call-me-Dave at PMQ's when it looks as if he might have to actually answer anything. You appear to have believed all the right wing propaganda pumped out by such as the torygraph and the daily fail about the tories being the party of economic competence, when the reverse is true.
For instance, the welfare bill always rises under the tories because they see unemployment as an economic strategy, and power as a business opportunity. Labour, by contrast, reduced John Majors' welfare spending by a third by getting people back into proper employment, not part-time zero hours jobs like this lot.
Still, that's not what the faithfull want to hear, they prefer cheap invective. Pity, let's hope they grow up in time to get kicked out in 2015 as they so richly deserve.

Utterly, utterly, delusional, incorrect, and in my view dishonest with yourself.

Your 'facts' aren't borne out by any data.

Sadly the fact free narrative about the financial crisis outlined above has become 'the truth' for a certain type of lefty. In the US the politicians and policy makes have admitted that they made mistakes and allowed a shadow banking system to arise that the didn't regulate and then couldn't control when it began to unravel. In Europe and the UK politicians refusal to do so is damaging their financial systems and economy to no end while stirring up mindless bigotry against bankers in precisely the way that Stalin did with the Kulaks, Mao did with intellectuals, Amin did with Asians and of course Hitler did with the jews.

Very well said. Miliband is a Nazi in all but name like all Socialists.