If Stephen Hester has an ounce of decency, morality and humility he will not accept his bonus of £963,000 in shares from RBS. This should be in recognition of his role as a public servant in times of severe austerity for the majority of the population.
But as Hester’s predecessor confirms, the position of CEO at RBS doesn’t tend to attract individuals who possess even the slightest notion of empathy or benevolence. Like the Prime Minister’s calls for moral capitalism in the UK financial services industry, to expect anything other than a lustful greed for accumulation from those at the top is but a naive hope.
…unashamedly reaping his rewards…
If Hester wants to save his own reputation he should follow the lead of RBS Chairman Sir Philip Hampton who has turned down his bonus of £1.4 million. The problem is this is not an issue that concerns individuals, but the entire banking industry at large. If Hester did not work for RBS, he would be quite unashamedly reaping his rewards at a company that was not 82% owned by the taxpayer. The systematic culture of bonuses and payoffs in the financial industry cannot be broken as too many groups, including the government, have too much to lose.
As Iain Duncan Smith made clear on Sunday morning, should the government challenge the RBS board over Hester’s bonus, the risk of resignations and the break up of the board could have catastrophic effects on the billions of public money invested in the bank. “Remember RBS’s balance sheet is as large, if not slightly larger, than the GDP of the UK. What would that do to ordinary people?”
…the successful recovery of the UK’s economy is so dependent on the success of the financial services industry…
In other words, the government is at the mercy of the bankers. RBS and Hester in particular know what the government has to lose should the bank fail and therefore they can name their terms and claim the benefits. Indeed the successful recovery of the UK’s economy is so dependent on the success of the financial services industry, that they can hold the government hostage until demands are met. For example, David Cameron’s veto of the recent EU treaty was motivated by a desire to protect the City of London from the so-called ‘Robin Hood Tax’. Likewise, while the government seeks to tighten the grip on the benefits and public sector pensions at the lower levels in society, very little is being done to challenge tax evasion. The inaction at challenging the endemic bonus culture in the City is an active decision to appease the banks and to the City of London as a major international financial centre.
In light of the harsh economic climate and the cuts to public services, it is very easy to criticise the governments decisions to protect the banking and financial services industry. And yet, they have no other option if the UK economy is to grow again. Other than North Sea Oil, there are no exportable natural resources that are demanded elsewhere.
…especially when the company concerned is 82% owned by the taxpayer…
It is a Catch 22 situation that the government finds themselves in. Standing up to the banks makes the UK an unattractive place to work, therefore pushing away much-needed investment into the economy. But not standing up to the immorality of the industry, most especially when the company concerned is 82% owned by the taxpayer, seriously harms the governments support amongst the electorate.
The only other option is the never-ending, inconclusive, drone of rhetoric that we have grown used to from ministers such as Duncan Smith. The pathetic bickering of party politics is used by both sides to hide the harsh reality. For all the moral arguments that Hester’s bonus has brought forward, one thing is clear; government power is weak compared to what can be wielded by billion pound companies like RBS. Where there is money to be made, the government will always be the puppet.