This has been a complete and utter disaster for the Government and shows, once again, questions about Cameron’s judgement, especially in the area of what is acceptable and what is not. It has been good for Ed Milliband who has scored points off Cameron by accusing him of a lack of leadership.
The issue is stark and simple. Senior employees of banks are thought by almost everybody except themselves to be supremely overpaid, not least because they almost single handed blew up the western economy and because barely a bank in Europe is capable of standing solvent on its feet without help, direct or indirect, from taxpayers.
This is the most toxic component of executive pay generally, which is now wildly out of line with what is right, reasonable and economically sustainable. The government, at the beginning of the week, announced the need for shareholders to act to curb excessive pay and bonuses. At the end of the week the Government as a shareholder, not as the government, but as an 80% plus shareholder, was faced with the challenge to show example. It simply walked away. Boris Johnson, who is probably the greatest potential threat to Cameron, described the drivel put out by the Treasury to excuse the fiasco of the Hester bonus as unacceptable and bewildering.
It is indeed that and more. It flies in the face of the government’s own policy newly announced days earlier. The excuse offered is that if it had not rolled over and let the bonus through, the whole board would have resigned. If this is true it is preposterous because ministers caved in and also because it amounts to blackmail. The proper response to such a threat if issued, would be to nationalise the whole of RBS by Order in Council. This would wipe out the remaining non government shareholders and set them upon the directors with a legal vengeance which would have been fun to watch.
This is a very sorry tale indeed. The Government’s performance borders on the imbecile. It kills stone dead any pretence that it understands the pain of the ordinary people. Moreover it undermines its authority at a time when Unions and other campaigners are on the warpath. What a mess.