The issue of Stephen Hester’s bonus is going to carry on hurting the government. Labour has now announced that it will use an opposition day debate on 7 February to hold a parliamentary vote on the issue. The coalition will either have to lose, an admittedly non-binding vote, or whip its MPs to go through the lobbies in defence of Hester’s bonus.
As Labour showed when it used the threat of a Commons vote to push Rupert Murdoch’s News Corp to abandon its bid for full control of BSkyB, the bully pulpit of Parliament can be extremely effective. These votes also bring out tensions within the two coalition parties. I imagine that Lib Dem MPs will be even less keen than Tory ones to support the Hester bonus.
There is, of course, a way out of this mess for the government: Hester following his chairman’s lead and not taking his bonus. Iain Duncan Smith suggested that this is what Hester should do this morning, and I expect we’ll hear more and more government ministers saying the same thing over the coming days.
This RBS bonus issue is just going to keep coming back every January. When the state rescued RBS and became the majority shareholder, the common view was that the bank would soon return to private ownership. But now it is hard to find anyone who thinks that the state will sell its share this side of the election.
Given how many years of austerity we are in for, it is hard to imagine that RBS bonuses will be any less controversial next year or in the years after that. The coalition would be well advised to try and find some long term solution to the problem now. One possibility is a set of bonuses that are only triggered once the state stake has been sold off and that are linked to the state recovering its investment in the bank.
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