David Maddox: Crazed joy from Labour MPs over bonuses may be premature

THERE is some dispute over whether the word cock-a-hoop is originally Scottish or Welsh but the definition of “insanely overjoyed” certainly applied to Labour MPs yesterday when they were discussing a certain Scottish bank and its chief executive.

The reluctant decision by RBS chief executive Stephen Hester to give up his £963,000 bonus late on Sunday was, for Labour MPs, the first big victory of Ed Miliband’s stuttering leadership. It was accepted that Hester’s decision was based on the fact that Labour had threatened to force a vote on his bonus.

But Mr Miliband and his MPs are not satisfied just with Hester’s scalp, they are now in hot pursuit of the bonuses of the other senior executives at RBS, although they have pulled back from holding a vote on named individuals in favour of one on a bonus tax next week.

They clearly believe they are on the side of the angels. After all, the coalition is trying to cap benefits per family to £26,000 at the same time as apparently supporting huge bonuses for wealthy individuals at a bank which after all is now 83 per cent state owned since it was bailed out by the taxpayer to the tune of £45 billion.

Few coalition MPs, apart from the odd Tory backbencher, are willing to say the converse and if they do then it is with caveats. But privately there is a great concern about what could result from this “political lynch mob” as one Tory described it.

It is being said that Hester is fed up as are other senior RBS executives who, like him had nothing to do with the collapse, and they could all be ready to walk.

They might be even more willing to do that when the bonuses for the other big banks are announced expected to be around £10 million for Barclay’s Bob Diamond and even more for HSBC’s Stuart Gulliver easily dwarfing what was on offer to Hester and co.

If the senior executives really do walk, which ministers genuinely seem to fear, then the bank will effectively be civil service run and it could put its recovery back hugely. Most observers seem to accept that while he has not hit all his targets Hester is doing a good job in the circumstances.

There is also a Scottish factor in determining what the impact of yet more damage on one of its great institutions will do for Edinburgh’s reputation as a financial services centre.

What coalition MPs are not shy of pointing out is the irony in all this posturing is that the contract and appointments of Hester and others was arranged and agreed by a Labour government.

The reason the then chancellor Alistair Darling agreed those terms was to provide RBS with the best possible chance of recovery and ultimately the taxpayer with a profitable return for the country’s investment.

If you take the excitement out of cock-a-hoop you are apparently left with insanity, and that could describe the current political posturing on all sides if RBS goes under again.