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Amid the continuing row over the pension package awarded to former RBS chief executive Sir Fred Goodwin, today's gloomy results from Lloyds Banking Group confirm the sector's unprecedented crisis. Lloyds has been dragged into the red by losses at HBOS, which it took over and which made a £10.8 billion pre-tax loss in 2008. Up to 40,000 jobs could be at risk; most of the workers affected are paid a fraction of that earned by men such as Lloyds chief executive Eric Daniels or Sir Fred Goodwin. Yet it still is far from clear that the heads of the industry understand their responsibility for this carnage.
Lloyds' five executive directors have all agreed, voluntarily, not to take any bonuses for 2008. That is right: the bank is now 43 per cent publicly owned, with the Government putting in £17 billion to date. But others will doubtless take bonuses. Meanwhile, Sir Fred last night launched a furious defence of his £693,000-a-year pension, spurning the entreaties of the Chancellor and the City minister, Lord Myners, to give up the money. He says the package was agreed in exchange for a 12-month notice period for his job which he voluntarily waived when he took early retirement last October.
That ministers allowed Sir Fred to get away with this is in part a measure of how quickly the crisis has moved. Last October, people were still in shock and the true extent of the banking industry's folly was not yet clear. The public backlash had hardly begun. Nevertheless, it is disturbing that ministers thought it acceptable to allow such lavish rewards for failure, at the same time as the taxpayer stepped in to foot the bill for the mess men such as Sir Fred Goodwin had created.
Despite dire performances by swathes of the industry, it seems that many bankers still simply do not accept that times have changed. As nationalisation is increasingly debated as an option to clean up the stricken industry, they would do well to learn a little humility before public outrage forces ministers to take more punitive measures.
Privacy in peril
This has not been a good week for our right to privacy. In an interview today, the Information Commissioner, Richard Thomas, warns that "creeping surveillance" has gone "too far, too fast": he is particularly critical of the proposed sharing of personal data between government and private sector, and of the proposed creation of a giant computer database to record every phone call, email and text message. Meanwhile earlier this week, former security chief Sir David Omand warned the war on terror will demand that we allow a much higher level of security service surveillance of personal data from emails to car number plates.
Yet the move to a surveillance state is taking place with minimal debate. The rise of Islamist terrorism has created fresh challenges for the police. But there is a real risk that in eroding hard-won rights to privacy, ministers will undermine the very democracy and open society that they profess to be defending. They have not made the case, for instance, for either ID cards or the Contact Point child database. They should scale back their plans - and open them up to proper debate in Parliament.
Peter Pan's city
The plan to stage a spectacular new production of Peter Pan in Kensington Gardens is a fitting celebration of the gardens' role in this most London-centred piece of children's literature. Author JM Barrie created the stories about Peter, the magical boy who lives in Neverland, set in the Gardens, for the children he met there; the Peter Pan statue stands by the Long Water. Barrie could never have imagined his stories told like the production this May, involving 360-degree computer-generated backdrops to Peter's flights past the Albert Hall and Nelson's Column. But the magic of this London favourite will be as great as ever.
Reader views (2)
Why should executives be rewarded if they make losses. It sends out the wrong signal, as there should be no rewards for failure. Bonuses should only be paid to directors who make POSITIVE contributions to a company's prosperity. Contracts should include such a proviso. Indeed if directors are responsible for such incompetence then any shortfall in that company's profitability should come out of their pockets.
- Mr. J. L. Gammage, Hereford, 28/02/2009 10:23
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If a teacher, a lawyer, or a doctor fails in his or her work, there is no reward. Why should bankers have preferential treatment? Apart from the fact that decisions such as that connected to RBS will inevitably mean that Britain no longer has much to be very proud of.
- Mark Wright, Milan, Italy, 27/02/2009 22:01
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