Tuesday, 10 February 2009

First the Apology Then the Fallout

Earlier today Sir Tom McKillop, former chairman of the Royal Bank of Scotland was amongst those apologising to the Treasury Select Committee at Westminster. This afternoon news came from Alan Dickinson, chief executive of RBS UK that the company plans to shed 2,300 jobs. He said:

"We recognise that any news of this nature is unwelcome at any time. It is essential, however, that we consistently review our business to ensure that we are able to operate as efficiently as possible, especially in the current economic circumstances.

"We will be consulting with our recognised trade union, Unite, and our employees throughout. We fully agree with Unite that we must keep compulsory redundancies to a minimum and we will."

I trust that as a result of this review the bonuses that they are giving out. Of the £20bn that the Government has used to bail out the back £1bn is earmarked to pay RBS employees bonuses. How much of this could be used to retain some of those 2,300 employees is a question that should be being asked by the Prime Minister as well as asking for those bonuses back.

Earlier today fellow Lib Dem blogger Charlotte Gore, who I normally consider far more economically liberal than me, claimed the Government should lay off the banks and their bonuses. There is one difference now to in the past when Charlotte worked from them. In the case of RBS the Government owns 68% of the bank and has every right to see that investment spent wisely. Why should the banks be a special case when other employees across the country are facing the possibility of a freeze on pay, not even getting their salary reviewed or may have to make further savings as their employers are feeling the pinch. If the market doesn't allow for it surely bonuses shouldn't be being paid?

When I was a Civil Servant my bonus was performance related and not a foregone conclusion, if I added value to the branch that I worked in I would be rewarded if I didn't then I wouldn't. This was a salary increase bonus not a one off payment. This year being in the public sector in an industry that is directly affected by the well being of other firms I wait with baited breathe. So maybe the banks should look at rewarding performance, but also be prudent about doing so, especially when many of their own customers are uncertain about their own financial futures.

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