skip to main |
skip to sidebar
On the 13 February, the former shareholders in Northern Rock lost their High Court bid to overturn a Government compensation scheme which they argued was based on criteria, set out in statute, that will result in their shares being valued at nothing.
The judges saw nothing unfair in the compensation scheme, requiring the Treasury to pay compensation on the same basis that it could fairly have paid in September 2007, rather than on the basis of a value enhanced by public funding unavailable elsewhere.
The government clearly took the view that without taxpayers money, Northern Rock would have gone bust. Had that happened, the shares would have been worth nothing. As it stands, under the compensation scheme, shareholders are likely to receive about 5p a share which falls far short of the £3-4 shareholders claim they deserve, but still 5p more than they would have earned had the bank gone under had the Treasury/taxpayer stood by and done nothing.
So where's the link to bonuses I hear you ask?
Well... the government claims it cannot force the nationalised or partly nationalised banks to stop paying all bonuses because many bankers have contracts stipulating bonuses that have to be paid and therefore if they violated these they would be open to legal challenge.
Therefore, we saw yesterday the government's "too little, too late" pressure applied on RBS to cut bonuses to the legal minimum i.e. to just those contractual obligations. Hence RBS will cut its bonuses from £1 billion to £175 million.
But is this good enough? Should failed bankers really receive £175 million in bonuses at RBS when the bank has been an abject failure?
The government should have done more. I'm not a lawyer, but the Northern Rock case made me think...
If the government can deny the shareholders of Northern Rock any real remuneration for their shares on the grounds that without taxpayers' money the bank would have gone bust, why can't the government say to the bankers of RBS that had taxpayers' money not been used to prop up the stricken bank, RBS would have gone bust and then those bankers whining about their bonuses stipulated in their contracts not only would not have received those bonuses, they wouldn't get a basic salary either because they would be out of a job.
The government has been far too meek on this issue and far too slow. Brown and Darling say they don't want to reward failure yet are standing by and letting that happen just because they are scared of a fight.
The Brown bounce is well and truly over.
The voting intention figures from the latest Ipsos MORI poll have just been released and show the Conservatives on 48 percent (+4), Labour on 28 percent (-2), and the Lib Dems on 17 percent (no change).
Since the turn of the year we have seen the polls shift back towards the Conservatives with their double digit leads being re-established. Recent polls have also shown Labour fall back under the psychologically important 30 percent level and several (ICM, ComRes and Populus) have shown a jump in support for the Lib Dems, at Labour's expense.
This latest poll shows the Conservatives as the main beneficiaries with the Lib Dems unchanged (YouGov's latest showed the Lib Dems down by 2).
The Tory 20 point lead is the largest since September and shows (i know it's only one poll - but it is following a trend) that Brown's bounce has been completely erased. Brown's personal ratings have also suffered a hit with 64 percent of people dissatisfied with Gordon Brown.
Brown inexplicably coaxed voters back to the Labour fold in the latter months of last year after the Labour Conference. As PM he was able to act and therefore portray himself as a man of action and as the "saviour of the world" he was able to give the impression that he had a grand plan that would save the British economy. The recession would be shorter and shallower because of his action and leaders across the world were following his lead.
These same voters have now deserted him and returned to the Tories. Brown has been found out. Last year he was giving the impression he was on top of events, but now it is painfully obvious that he is behind the curve and being buffeted around on a whole range of issues. The steps he has taken are not working, they are just adding to our huge public debt and are being denounced by Germany, France and the Netherlands.
Far from being the decisive strong leader, he has once again shown himself to be a dithering, ineffectual leader - something which was clear from his handling of his handling of the bankers' bonuses issue. He has sat on his hands since October, then the bonus season arrived and the negative press finally spurred him into action only for him to then announce yet another review which will report by the end of the year.
The recent stories about Sir James Crosby are also really damaging for Brown who had a terrible time last week. It was last week that Brown was linked to the failures of the bankers as it was he who designed our regulatory system, removing the supervisory role of the Bank of England against the advice of the then Governor Eddie George. This will be Brown's Achilles Heel. This is just the beginning. Public hostility towards the bankers will increasingly turn to Brown and the Labour government.
Time to call that general election, Gordon...
