Bankers bonus scandal: We need socialist nationalisation

£950,000 is a hellavu lot of money.  Especially when it comes on top off a salary of £1.2M. For a banker like Mr Stephen Hester, the Chief Executive of the Royal Bank of Scotland (RBS) it is an obscene amount.  Against the background of families who will not receive anything like that income in their lifetimes and when they are on the sharp end of attacks on wages, pensions and welfare benefits, it is particularly obscene.

After pressure from all and sundry Mr Hester waived the bonus. He’ll just have to make do with his annual salary of £1.2M. Since he was parachuted in to run the bailed-out bank in October 2008 he has taken home more than £11m in shares and cash. The complexity of Hester’s pay package is typical of boardroom pay deals. His basic salary is supplemented by annual bonuses and a long-term incentive plan linked to his three-year performance deal. On top of that, he gets fringe benefits, which usually include perks such as private health cover, and an annual pension contribution paid in cash.  These levels of remuneration are typical of the other senior executives within RBS which is 82% publicly owned.

A look at another chief banker’s package reveals the level of inequality between the bosses and the ordinary bank workers who receive about 1% of what Hester receives. Barclay Bank’s Bob Diamond is in line for £10 million!

Obscene pay does not just exist in banking. The average pay of the top executives of the Financial Times Stock Exchange quoted companies is £4.2 million.

The would-be pension thief and Unilever chief exec Paul Polman receives £3.5 million a year, including £300,000 into his own pension. Last year, the man who earns 285 times more than his workers, said: “What I want is a sustainable and equitable capitalism.”

Obscene levels of pay, although not to the same extent, extends to the chief civil servants. Recent publicity has been given to one who also was involved in tax avoidance. The Students Loans Company (SLC) chief executive, Ed Lester, is paid £182,000 a year through a private firm he has established, rather than being paid directly. The arrangement with Lester, entered into in 2010, allowed him to save as much as £40,000 a year in tax, because he would pay corporation tax of 21% instead of up to 50% in income tax. The government has been forced to stop the arrangement and treat him as any other employee and root out all similar arrangements within the public sector.

Mr Fred Goodwin, the man in charge of the RBS when it required bailing out has had his knighthood removed.  Alex Salmond, a former RBS economist, encouraged the disastrous takeover of the Dutch bank ABN Amro, the very deal which led to the downfall of one of Scotland’s largest financial institutions and the humiliation of its subsequent £45 billion bail-out by the UK taxpayer. Of course it was welcomed by the then Labour Government, the rest of the political parties and the Financial Services Authority saw nothing wrong with it.  None of them have had their honours withdrawn.  The corrupt back slapping honours system, where pals give honours to pals should be abolished.

The issues of bankers’ bonuses and the removal of honours have demonstrated the hypocrisy which has never been more rife amongst the rich and powerful and their politician backers.  All parties are harping on about socially responsible capitalism but their actual actions have been pathetic.  Of course they won’t explain that social responsibility and capitalism are incompatible. All are united in driving down the living standards of the working class whilst pretending to curb the vast incomes of the rich by offering up a few sacrificial lambs in the hope that the people will be fooled. Concentrating their fire on one bank, The Royal Bank of Scotland and on two individuals within its story does nothing about the selfish get rich culture amongst the few thousand who are in control of the major levers of the British economy.

We need to build a mass movement to fight for genuine socialist nationalisation of the entire banking system and the big corporations, putting the levers of the economy in our hands – not those of the super-rich. That has to be part of a democratic socialist plan, coordinated with workers internationally.