John Redwood MP: RBS's Stephen Hester right to waive bonusBy John Redwood MP
February 01, 2012
I am relieved that Stephen Hester decided to waive his bonus at the Royal Bank of Scotland.
I have been unhappy for some time about the remit the last government gave to RBS, and the remuneration offered to senior directors to carry it out.
I have been lobbying the coalition Government to change both the task set the board, and the way we pay for it to be carried out.
I have no objections to successful directors and executives in the private sector being well rewarded.
That is a matter for their shareholders and for them.
Government cannot get into the business of setting levels of pay throughout UK companies, especially as they have to compete in a global market where talented people and successful companies can take themselves elsewhere if government interferes too much.
Government has enough to do, without trying to decide what is fair or reasonable for a director to be paid.
I do have objections to a few employees in the public sector being paid much larger salaries and bonuses than most others in public service out of taxpayers’ money.
I do not think it a good idea to pay large sums at RBS to senior people before they have delivered the profits and the dividends to shareholders that we would like.
I am pushing for the Government to require the RBS board to split the RBS group up, creating a range of new banks and financial service businesses out of the empire they preside over, and sell these on as quickly as possible to the private sector.
So far the Government and board has come round to the view that they should sell off the investment banking businesses, which is a welcome start.
I would reward the directors at private sector levels for doing this, once they have succeeded.
Their bonuses should be based on what they return to the private sector and how much money to get for it.
I do not believe for one moment that even Mr Hester can get back all the taxpayers’ money poured into RBS.
We are into damage limitation, into getting the most we can for it, into cutting taxpayers’ risks as quickly as possible.
Ministers are not cut out to be bank shareholders.
Taxpayers will not take kindly to more losses from the state-owned banks.
We need a stronger policy to get them off our payroll.
Part of the reason for my proposal is the knowledge that we need more banks, more banking competition, and more willingness by High Street banks to lend to small and medium sized enterprises and to solvent individuals.
The current state of our nationalised banks is holding back recovery.
That’s why the Government needs to do more than breathe a sigh of relief about a £1 million bonus waived.