Royal Bank of Scotland should not be “leading the way” on bankers’ bonuses, David Cameron warned, amid reports its chief executive was to receive a £6.8 million pay package.
The Prime Minister said the bank, which is 83% owned by the taxpayer, should be a “back-marker” when it came to pay-outs as he urged the financial sector to be “socially responsible”.
But although he called for a reduction in the overall City bonus pot, he said he would resist pressure to “micro-manage” banks and cautioned against making them a “scapegoat”.
Mr Cameron also used broadcast interviews with the BBC to defend the Government’s economic policy and to issue a clear warning to trade unions he would not change course if they decided to “kick off”.
But he was accused by Labour of piling pressure on the less well off after declaring that the VAT rise to 20% was likely to be a long-term measure but the 50p income tax rate for top earners would hopefully be dropped.
The reported scale of RBS chief Stephen Hester’s remuneration package – said to include a £2.5 million cash-and-share bonus this year – was “pure speculation” he said and yet to be finally determined.
“Royal Bank of Scotland, as you rightly say, is owned by the Government. They should not be leading the way on bonuses, they should be a back-marker,” he told BBC1’s Andrew Marr Show. However it was important that the banks could be sold to recoup the taxpayers’ investment, he added, “and we won’t do that if we micro-manage them on a daily basis according to whatever’s in today’s papers”.
Mr Cameron indicated that although it would inevitably stunt economic growth to some extent, 20% VAT was likely to be “pretty permanent” as the UK dealt with its structural deficit. But Labour’s alternative of targeting National Insurance would be “very, very perverse” at a time when it was vital to get growth in the jobs market.
Labour said the Government was hitting the public with a “double-whammy” of higher fuel duty and the VAT increase and that “ordinary hard-working” families were paying the heaviest price.
Shadow chancellor Alan Johnson said: “David Cameron says families up and down this country will have to get used to permanently higher prices – the VAT rise is here to stay long after the deficit is gone. Instead his priority is to cut taxes for those earning more than £150,000. Cameron says we are all in this together but his priorities couldn’t be clearer. For this Tory-led government ordinary hard-working families are last in the queue for support.”