LET THEM GO, LET THEM GO, LET THEM GO

The board of directors of Royal Bank of Scotland has threatened to resign if the government, now a major shareholder in RBS, blocks its attempt to pay £1.5bn in bonuses to its investment staff. The government should give them a one-word answer: “goodbye”.

Paul Myners, the Financial Services Secretary, reckons payments of £1m or above will have been made to more than 5,000 individuals in British banking this year. As a former city man himself, Lord Myners knows of what he speaks. He managed a pension fund for some fifteen years and is reckoned to have made £30m while at it. Among his chairmanships have been Marks & Spencer and Guardian Media Group. But perhaps his most significant post was as a director of NatWest, resigning when it was taken over by Royal Bank of Scotland. It would be interesting to know what emoluments he accepted at NatWest and whether he received any sort of golden handshake from RBS. One wonders too whether he jumped or was pushed. Did he suspect the windy buccaneering of Sir Fred Goodwin and his crew would bring no good to NatWest? Or did the new owners detect that he was not going to be one of them?

But that was then and this is now. As a poacher-turned-gamekeeper, Myners should be wise to all the tricks that the banks will attempt to play, as well as having a shrewd sense of how much his crossing over must be resented. He should call their every bluff. Non-partisan commentators are saying that the government is in a cleft stick. But that is only so if Myners, Gordon Brown, Peter Mandelson and Alistair Darling fail to slap down the banks.

Vince Cable, the always on-the-money treasury spokesman for the Lib Dems, says that the government mustn’t give in to what is essentially blackmail and that, with many good people in the city looking for work, replacing the RBS directors will not be difficult.

This chimes with my own scorn at the airy talk we get from the city about how you have to pay big money to get the best people. What best people? If RBS had the best people, it would not have needed bailing out by the government. And with banks all over the world shedding staff at every level, who is going to be so reckless as to march into such a discouraging jobs market?

In any case, what bank worth its salt is looking for staff whose main motivation is making money for themselves? Are the recruiting people so gullible that they fall over each other to employ wiseacres whose self-selling pitch is “I left because they couldn’t match my demand for a £2m bonus”?

It is fanciful to assume that people who elect to leave will be promptly snapped up by the likes of Goldman Sachs in New York. Why would foreign bankers be keen to have staff from a bank that has required rescue by its own government? It seems to me that the sooner RBS recruits people who are keener to lead the bank out of trouble than to line their own pockets, the sooner they will get the government off their backs.

For its part, the government has a potential election-winner here if it cares to go for it. Most people, both inside and outside the city, expect a Tory government to favour its long-term friends in the money markets, many of whom pour funds into the party’s election war-chest. By making it plain that the parasitical class will not be the ones who do well out of the recession, Labour would surely raise an approving response in the ballot box.