Leading Tory attacks ‘crony capitalism’

The former Tory leadership contender hit out at the coalition government for failing to block the near £1 million bonus for Royal Bank of Scotland chief executive Stephen Hester, arguing it should have been “out of the question”.

In an article for Prospect magazine, he also suggested the Leveson inquiry into media ethics should turn its spotlight on political leaders. Mr Davis suggested ministers were too close to big business, while smaller firms were struggling to get access.

“Since the term was coined, coalition and opposition leaders have battled to be seen to lead the fight against crony capitalism and all that it entails. But when it comes to crony capitalism, government is often not the solution, but part of the problem,” he wrote.

Last month, Tory London mayor Boris Johnson claimed it was “absolutely bewildering” that a state-backed bank should pay out such a high bonus to its chief executive, but Mr Cameron refused to block the payout.

Mr Hester later bowed to intense political and media pressure to waive the 3.6 million shares package worth £963,000.

“This government got itself into a terrible pickle over whether RBS boss Stephen Hester would pocket a £1m bonus on top of an annual salary which dwarfs most people’s lifetime earnings,” Mr Davis wrote.

“The government thinking is instructive.

“Apparently the government, which owns 83 per cent of RBS, feared Hester would quit if it vetoed the bonus. So what? A business doesn’t instantly collapse if the chief executive leaves.”

The former shadow home secretary said after his experience chairing the independent Future of Banking Commission he finds it “laughable” that politicians “imagine the banks are so difficult to run”.

“If Hester did quit I doubt there would be a shortage of suitable applicants,” he added.

“At a time where living standards are falling fast, handing huge bonuses to the heads of banks which owe their very existence to taxpayers should be out of the question.”