The definition of ‘excellence’

However, the issue is a not a clear-cut one, despite the best efforts of Ministers to formulate a robust response to the excessive payouts that continue to anger so many people as the economic downturn drags on remorselessly. There are two matters that need to be reconciled at the outset.

First, when can any new policy be introduced, given that bonuses of varying degrees of generosity are already an intrinsic part of existing contractual agreements?

Second, can Ministers influence boardroom deals in those private sector companies that are the recipients of large Government contracts or which benefited indirectly from Treasury policies, such as those banks that were not bailed out by taxpayers?

It does not get any easier when Ministers look at the implementation of any new bonus clampdown in their own departments, or those quangos that come under their jurisdiction.

Treasury chief secretary Danny Alexander says there should be performance pay for “genuine excellence and not just run-of-the mill performance”, but how can “genuine excellence” be defined when it could take many years to determine whether an individual’s leadership or decision-making has been in the public interest or not? Equally, a strong case could be made for lesser executives being awarded bonuses if their work accrues significant long-term savings for the taxpayer.

That said, the Government’s apparent antipathy towards bonuses must not send out a misleading message that Britain is closed for business – the challenge is finding a way to reward successful individuals within reason, and in a manner that still inspires the best people to work towards returning the nation’s public finances to some sort of equilibrium.

Perhaps one way forward is for such posts to command smaller salaries in future – but retain a bonus element so that individuals are incentivised to excel at all times rather than being rewarded, as is so often the case, for mediocrity or even failure.