RBS bank bonuses an open goal for Ed Miliband

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.

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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."