Miliband challenges Cameron to block bonus for RBS boss

Mr Miliband issued a challenge to the Prime Minister that he would be judged by his actions over any financial awards given to the bank’s chief executive, Stephen Hester, who took over from former boss Sir Fred Goodwin after the bank needed a £45.5bn bailout.

David Cameron last week said that any bonus paid to Mr Hester would be a “lot less” than the £2m he was given last year, but would not go further.

Last night Mr Miliband 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.”

Earlier, Deputy Prime Minister Nick Clegg also insisted there should be no big, million pound-plus for Mr Hester, but dismissed as “pure speculation” reports the chief executive was set for an award of £1.5m or more.

Mr Clegg said yesterday the Government’s ability to influence bonus payments at RBS – which remains 83 per cent owned by the taxpayer – was “constrained” as a result of contractual arrangements entered into by the last Labour government.

He made clear, however, that Ministers expected the overall bonus pool at the bank to be “considerably lower” than it was last year.

“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 added.

“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 told the BBC.

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

Mr Miliband said earlier in an interview with a national newspaper: “David Cameron has said on numerous occasions that he would stop banks paying out big bonuses. He has also called upon shareholders to stop excessive executive pay,” he said.

“The best thing that could happen is that top management at RBS recognises the need for restraint. But if it doesn’t happen, Cameron should act to stop Stephen Hester being paid a bonus of this scale.”