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The Chancellor, Alistair Darling, declared this weekend that "the party is over" when it comes to bank bonuses.
Not for some, it isn't: the music carries on for those RBS executives who seem likely to share hundreds of millions of pounds in the coming bonus season. The bank, which survives on the basis of a £20 billion bail-out from the taxpayer, is now almost 70 per cent state-owned. Stephen Hester, the RBS group chief executive, has been at pains to say that only those bonuses which the bank is contractually obliged to pay will be honoured.
But the bank only exists at all by virtue of state intervention. The notion that it must pay bonuses as if nothing had happened will, as Treasury Secretary Yvette Cooper emphasised today, go down badly with taxpayers. Equally, the argument that the bank must at all costs retain its key staff has little force when there are so few places they can go. There is a case for Mr Hester to call the executives' bluff; another option may be to consider paying bonuses in the form of equity which could be realised only when state aid is repaid.
By way of consolation for not addressing the bonus problem now, the Chancellor has promised a government review, led by the ex-City regulator Sir David Walker, which would report towards the end of the year. This, however well-intentioned, looks like the classic ministerial response to a sticky problem: an investigation which will take months to deliver its recommendations. Yet the Government already has a banking expert within its ranks, Lord Myners, who takes a dim view of the bonus culture. It is hard to see what this review can offer that we do not already know.
Further, the Chancellor says that any future bailouts will be conditional on curbs on executive pay. Did this not occur to ministers a few short weeks ago when they were authorising the RBS rescue? Out in the world away from the City, conditions are bleak. Today's CBI report on companies' difficulties in getting affordable credit gives some idea of the scale of the challenges. In this environment, the bankers' bonuses will seem like bad taste.
Haringey blame
Sharon Shoesmith, the former head of children's services at Haringey, has robustly defended her reputation in the wake of her dismissal after the Baby P murder. She blames both party political intervention and a media witch-hunt for her dismissal. She has been scathing of Children's Secretary Ed Balls, claiming that his reaction has encouraged a "blame culture". And she denies personal responsibility for the tragedy.
On the credit side, Ms Shoesmith says she has repeatedly examined her own conscience about the child's death. But it is hard to square her description of the approving reports on her department with the independent inspectors' investigation of child protection in Haringey, on the basis of which Mr Balls dismissed her. Baby P was a child at risk, who was suffering sustained maltreatment at the same time he was being seen repeatedly by social workers under her charge. The abusers may have been deceitful but the abuse should have been noticed and acted on. Ms Shoesmith cannot duck her responsibility. Mr Balls was right: she had to go.
Bafta hurrah
It was a great night for homegrown talent. British film swept last night's Baftas, with Danny Boyle's Slumdog Millionaire taking seven awards and Kate Winslet winning best actress for her role in The Reader. Then, at the Grammys in Los Angeles, Britain dominated again, with Robert Plant taking five awards for his collaboration with Alison Krauss, and awards too for Coldplay, Duffy, Adele and Radiohead. The economy may be in freefall and our transport system may collapse under a bit of snow - but our creative talent leads the world.
Reader views (1)
Tackling the weak-kneed Brown is the problem. Obama has come out against bonuses and, now, so has Sarkozy. These leaders are not 'urging' the bankers. They're telling them. Our laddie is too sleekit and tim'rous, like Burns's mouse.
- John Problem, Hackney Wick, London, UK, 09/02/2009 18:14
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