A senior Treasury minister has said he was “sceptical” about whether any application from the predominantly state-owned Royal Bank of Scotland to double its maximum bonus payouts could be justified.
A European Union cap coming into force next year only allows bonuses of up to double an employee’s salary if shareholders approve them, if not packages are restricted to the equivalent of 12 months’ pay.
Prime Minister David Cameron has announced a £2,000 cap on cash bonuses next year and promised to veto any increase in overall pay at the bank.
But there was no commitment to limit bonuses paid in shares and because numbers of investment bankers at the bank have been cut, Labour dismissed as meaningless the effect of his veto on individual packages.
Labour last week called on the government to use its position as a majority shareholder in RBS to veto an expected proposal for senior staff at the bank to take bonuses of up to double their salaries. Treasury Chief Secretary Danny Alexander said no approach had yet been made by RBS. The government could use its status as shareholder to block any proposal to lift the bonus cap.
Mr Alexander said: “I would obviously look at what they have to say, but I would be very sceptical as to whether a case could be made.”
He added: “That’s a bank that has benefited from the taxpayer standing behind it and where the strategy is now RBS has to focus much more on domestic, retail and business customers.”
The Liberal Democrat minister said that Tory Euroscepticism could lead to a “disaster” for investment in the country. He said: “I think the biggest risk to the economic recovery over the next few years is either a majority Labour government or a majority Conservative government. Labour you can’t trust with the nation’s finances, the Tories want us to play a game of chicken with our largest economic market the European Union.
“That would truly be a disaster for investment in this country.” Mr Alexander said he was not aware of Chancellor George Osborne’s intention to signal a rise in the minimum wage – a policy championed by the junior coalition partner.
The Chancellor indicated last week he was ready to contemplate an increase of the present £6.31-an-hour rate to £7.
The independent Low Pay Commission is due to make its recommendations on the level of the minimum wage and its potential impact on jobs in February.
Mr Alexander said: “I didn’t know he was going to say something on that particular day. I have spent a lot of time talking to him about it over the previous months, we have worked together on it in the Treasury to look at what would be the economic impact and to emphasise that it’s the Low Pay Commission here – which is something that has credibility with business and with trade unions and with government – who need to make this judgement.
“It mustn’t be a politically motivated increase, it needs to be backed up by the economic reality.”