On the day that David Cameron finally makes his long-promised speech on moral capitalism, here are two tests of his commitment to the concept. RBS, the bank, lest we forget, that we now own 83 per cent of, is planning to award its chief executive Stephen Hester a bonus of around £1.2 million, despite a halving in its share price in the last year.
“The board is unequivocal and unanimous that the chancellor does not set the bonus for the chief executive of RBS,” one senior banker tells the FT. “Stephen is being urged by a number of people to accept the bonus and I think he will.” This may be so (and whatever happened to George Osborne’s promise to outlaw bonuses at banks that had received any sort of taxpayer guarantee?) but it rather overlooks the fact that the bank’s share price has fallen 43 per cent in a year, wiping £11bn off its market value. This would indeed be rewards for failure, the practice that Cameron is so fond of condemning.
In the meantime, moves are afoot to strip Fred Goodwin, the villain of the financial crisis, of the knighthood he was awarded for “services to banking”. Following the excoriating report into RBS by the Financial Services Authority, MPs are planning to refer Goodwin’s case to the Whitehall body responsible for investigating whether honours should be revoked.
There’s something rather unsavoury about the use of Goodwin as a sacrificial lamb to appease an offended populace, while the system that produced him remains unreformed. But being nasty about Goodwin has become a political virility test in the Westminster village.
Here’s Labour frontbencher Emily Thornberry:
I think honours are supposed to be for people who deserve them, and he doesn’t.
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Here’s the Lib Dems’ Tim Farron:
It was completely inappropriate that he had it in the first place. He is someone who has damaged the country by his actions.
If it had been through incompetence, we could have lived with it. But it was through utter recklessness which cost thousands of people their jobs and left us to pick up the bill.
And here’s Conservative MP Matthew Hancock, George Osborne’s representative on earth:
No-one has ever presided over a bigger corporate disaster that has had implications for every single family in Britain than Fred Goodwin.
The knighthood given to him by Gordon Brown is inappropriate for someone who was reckless at the helm of one of Scotland’s oldest institutions.
Cameron has rarely missed an opportunity to attack Labour for its decision to award Goodwin a knighthood, so will he now take an opportunity to correct this historic error? And he will veto the extravagant bonus soon to be awarded to Goodwin’s successor? If his “moral capitalism” is to have any standing in the eyes of the public, the answer must surely be yes.
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