Stephen Hester’s bonus

It’s not particularly surprising that Stephen Hester has given up his bonus. The political pressure had become too great, and for once Ed Miliband has out-manoeuvred the PM by calling for a Commons vote on the issue. We shouldn’t over-estimate the significance of the climbdown, but it does illustrate a number of things.

The Tories are actually quite stupid. Again we have another demonstration that the supposed political geniuses running the Conservative Party are no such thing. They seem to have stumbled from one stupid and untenable position to another in recent days. It seems that amongst leading government figures only Vince Cable was initially aware of the political toxicity of taxpayer owned bank paying out a £1 million bonus. If the Tories really knew what they were doing they wouldn’t have let it get this far and would have put the kibosh on the bonus, or at least given the impression of doing so.

They are certainly vulnerable to attack from a well-organised and focussed opposition, and they have shown time and again that they lack the sure-footedness of their political predecessors (this, Murdoch/Coulson/News International, the tardy response to the summer riots, the proposed sell-off of forests, giving the police a kicking, the dismantling of the NHS being just a few examples of political incompetence by The Coalition) 

Tories and the people running out the banks are out of Touch. Linked to the first point, but the Labour leader is right to point out that the Tories and the people running the banks have seemed violently out of touch over the matter. A government so keen on populist stunts around welfare seems strangely unwilling to indulge in something similar over bankers bonuses…….  It clearly took them an embarrassingly long time to realise the depth of potential public anger over the matter. Iain Duncan Smith’s suggestion yesterday that the withdrawing of the bonus could cause ‘chaos’ highlights that the banking sector and their political allies don’t realise that it is their own interests to show a degree of self-restraint and humility over the issue. Part of me wishes that Hester had been bloody-minded enough to demand the bonus just to see what could have followed.

Labour can win by being aggressive and not going along with everything that the Tories do. Once again we see Labour profiting from attacking the government from the left. It is tragic that the wider political lessons about Labour Party policy aren’t being drawn from this. Ed Miliband has scored victories when he has gone for the jugular.

There is mileage in a ‘tax the rich’ discourse. Again linked to the previous point, but there is clearly political mileage arguing that there are viable alternatives to austerity. Something that the Labour leadership of Miliband and Balls need to bear in mind when they are prostrating themselves before the likes of Liam Byrne and Jim Murphy. As Mehdi Hasan points out in today’s Guardian, the concept of paying off the deficit by making the rich pay seems to have been deliberately kept off the agenda by those determined to roll back the state and introduce the market into public services. Labour need to revive the idea of taxing the wealthy on economic, moral and political grounds. I simply don’t believe that copying the Tories economic plans is an electorally viable strategy, and that is regardless of the fact that doing so is economically illiterate and spineless.

Chukka Umunna is a formidable operator. The Shadow Secretary of State for Business, Innovation and Skills has shown himself, once again, to have a certain something about him. He has led the line in refuting the government’s lie that they had no choice but to authorise the bonus. I remember his destroying George Osborne in a select committee a few years ago, and while I think his politics are often as weak as piss, as a politician he is certainly impressive. He is confident, self-assured, articulate and clearly very smart. I think we’ll hear a lot more from Mr Umunna in the next few years, especially considering the utter mediocrity of many of those around him. 

The Tories are liars. The government have been very dishonest over this. Initially they tried to say that the bonus was in fact Labour’s fault, and when this was pointed out not to be true they changed tack, saying that there would have been mass resignations from the board of taxpayer-owned RBS if they vetoed the bonus! Apparently calling the bluff of the board never crossed their minds………   

One thing that does worry me is that dishonesty seems to have been normalised across the parties, and it is a worrying trend. That the Tories look like they can gloss over their dissembling is a tad depressing when really they should be dragged over the coals for being guilty of some serious bullshitting. 

I’m inclined to think that the government and political class are happy for rows about inequality to focus on largely insignificant matters like Stephen Hester’s bonus. The central political issues of gross inequality, possible economic contraction and a financial sector that needs to be brought back under control can be pushed to the margins while the focus stays on what is to all intents and purposes a matter of window dressing.

The Tories have had their fingers burnt but as yet haven’t been seriously damaged over the issue of obscene executive renumeration. It remains to be seen if Ed Miliband can take advantage.

2 Comments (+add yours?)

  1. Jim Denham
    Jan 30, 2012 @ 23:08:12

    Very good and perceptive piece. As you say, for once Miliband has wrong-footed Cameron. He must keep at it, especially given Cameron’s atement to the effect that from now on, RBS bankers’s bonuses will not be “micro-managed.”


  2. Harry Alffa
    Feb 02, 2012 @ 17:01:18

    I have written to the Treasury Committee, and I deduce that they are all in the pockets of the banker’s.

    It seems a no-brainer that the way to get capital flowing to small businesses is to set banker’s top-rate income tax according to unemployment levels.
    The bankers of course will always, and have, argued against anything which reduces the amount they are skimming off the economy.
    The Treasury Committee MPs have completely ignored this idea, despite repeated attempts to get a response from them.

    I am forced to conclude therefore that they are all extremely stupid or they are all on the take – and even MPs can’t be that stupid.

    The Commons Front Benches
    For a short time after the coalition government was formed the opposition front bench correctly argued against the description that the last Labour government was the sole cause of the UKs current economic quagmire. They correctly pointed out the City bankers were paying for the conservative party, and that it was the bankers who had buggered up the whole globe, including the UK.
    The sudden lack of protest from the opposition front benches at the bankrolling of the Conservatives by The City, and equally sudden lack of protest at the continued misleading of the House and country by the government benches that the main cause of the poor performance in the economy was the last administration, forces me to conclude that the Labour front bench has also been bribed by the bankers to silence these protests.

    Vince Cable
    The Business secretary had a green paper which proposed that unless lending to SME’s reached certain targets, banker’s bonuses would be taken away. This was dropped, and Project Merlin had a poor replacement “negotiated” by the bankers. I suggest that Vince Cable must also have been in receipt of bribes for this magical disappearance of any hard consequences for the bankers in proportion to the poor performance of the economy.

    Labour MPs
    The recent change of tactics by News talking head Labour MPs to suggest that the cause of the current economic poor performance is the coalition government, and not mentioning the continued part played by the financial sector of failing to support SMEs – and actually inhibiting SME growth by ripping them off – forces me to conclude that they have been bribed not to mention the banks as part of the economic problems.

    The House of Commons
    I am forced to conclude that, just like the House was corrupt and in the palm of Rupert Murdoch for 20 to 30 years. The House of Commons is corrupt and in the palm of the bankers.

    What are you going to do about it?

    My deductions are based on this:
    I propose a “performance related income tax”, such that bankers top-rate tax is set at 10 times the unemployment percentage rate – this would have seen a recent rise for the bankers from 83% to 84%.
    Also that the bank levy would simply be the cost of Jobseekers allowance to the country – about £5 billion per year just now.

    At pre credit crunch levels these figures would have been about 50% and £1.7 billion.
    At full employment levels these figures would be at or near zero.

    I think the deduction of bribery is difficult to escape given this.


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