Ed Miliband: David Cameron must block RBS chief Stephen Hester’s bonus

Mr Hester is reported to be in line for a bumper pay-out of around £1.3 million from the bank, which is 83 per cent owned by the taxpayer.

A final decision will be taken by its remuneration committee this week and the Labour leader said he wanted Prime Minister David Cameron to intervene.

Mr Miliband pointed out that RBS’s share price had halved in the past year and that, in the circumstances, it would not be “fair or right” to hand a seven-figure bonus to an executive who already receives a £1.2 million annual salary.

He said: “Taxpayers are still footing the bill for what’s happening at the Royal Bank of Scotland. If responsibility means anything I don’t think he should be getting his bonus. And the Prime Minister, if he’s true to his word, would exercise his responsibility to do something about that.”

Deputy Prime Minister Nick Clegg waded into the debate, also insisting there should be no big, million-pound-plus bonus payout for the boss of the mainly state-owned Royal Bank of Scotland, but he dismissed reports of the exact figure of Hester’s bonus as “pure speculation”.

He admitted that the government’s ability to influence bonus payments at RBS was “constrained” as a result of contractual arrangements entered into by the last Labour government.

However, he made clear that ministers expected the overall bonus pool at the bank to be “considerably lower” than it was last year.

“We have been very, very clear that in RBS – and for that matter in other banks – the bonus pool has got to be considerably lower than it was last year,” he said.

“The Bank of England, the Financial Services Authority, are saying exactly the same thing because any money that is spare should be where possible used to repair the banks’ balance sheets.”

Mr Clegg stressed no decisions had been taken yet on the bonuses at RBS. “There has been no agreement yet. There is an arm’s-length body, the UKFI [UK Financial Investments], that represents our interests in these decisions and they haven’t yet arrived at a decision on the RBS bonuses,” he said.

Meanwhile it has been reported that investment bankers at Royal Bank of Scotland are to share a £2.5 billion pay and bonuses pot, taking an average of nearly £140,000 each.

However, the sums paid will be much lower than those offered by rival banks, such as Barclays, where investment bankers are likely to get more than £200,000 a head.

Details of the latest huge pay deals for the bosses of Wall Street’s big banks are also starting to emerge. Jamie Dimon, the chief executive of JP Morgan, is expected to be paid a total of $23m (£15m) for 2011, roughly the same as he received last year.

The bank’s shares have dropped about 20 per cent over the year.