Penalties, as the current bonus season reveals all too clearly, are still a matter of class. If you’re a young person 16-24 on a work experience programme promoted as ‘voluntary’, and you drop out even for good reason, you stood to lose two weeks’ benefit (until the government was forced to back down by public pressure). If you’re a banker and you’re guilty of large-scale mis-selling of payment protection insurance (PPI), you have your bonus reduced by 25-40% – not quite the same existential penalty when your bonus was £1.45m.
When the bailed-out Lloyds made £3.2bn losses because of PPI mis-selling, the former chief executive Eric Daniels was still left with a bonus of £870,000. One wonders how large the bank hit from mis-selling would have to be for Daniels to lose the lot.
A provision of £3.2bn to cover the cost of vast mis-selling is colossal, yet the total sum recouped from the bonus pool has been a mere £1.5m and only 13 bank executives have suffered any loss at all, some as little as a trivial 5%. With typical brazenness Lloyds declared that shaving the bonuses was “based entirely on the principle of accountability and in no way on culpability of the individuals concerned”.
What toffish hypocrisy! If there were even a scintilla of justice and accountability, far more than 13 executives would not only have been stripped of any bonus, but prosecuted for a serious offence committed on a huge scale.
The real test will come later this month when Barclays announces its bonus pool for this year, and particularly that for the arrogant and greedy leader of the pack, Bob Diamond. What Osborne should of course be doing in the coming budget is laying down that no bonuses should be paid at all until all the £90bn owed to the State for the bailouts is repaid – fat chance when the Tories get half their donations from the bankers, thus enabling the City to hold the country to ransom.
The only reason why Hester gave up his £1m bonus at RBS (extremely grudgingly) was because Ed Miliband forced the issue to the top of the political agenda in a Commons vote when Cameron was clearly minded to wave it through. Miliband, amazingly, from the relatively powerless position of Opposition leader, stopped the bonus gravy train in its tracks, with RBS cutbacks followed by Network Rail and then Lloyds. Cameron in his usual dilettante manner taking the line of least resistance is still obviously determined to make the least changes in the bonuses scandal that he can get away with.
