Ed Miliband has warned bankers they must wave goodbye to their culture of “excessive” bonuses and reconnect with the rest of the country.
The views of the Labour leader were echoed – to a degree – by the chairman of the Royal Bank of Scotland (RBS), Sir Philip Hampton, who said bankers’ pay is too high and needs to be “corrected”.
But Sir Philip also said that, relative to other bankers, the rewards offered to RBS chief executive Stephen Hester – who last week waived a £1m bonus after coming under extreme public and political pressure – were not high.
In a speech in London’s Canary Wharf financial district, Mr Miliband urged a return to “one nation banking” which would serve the wider economy and society.
His appeal came at the end of what he called a “turbulent” week for the banking industry in which disgraced former RBS chief Fred Goodwin was stripped of his knighthood.
Mr Miliband said: “We cannot have a banking sector so divorced from the rest of the economy and the rest of society.”
“We need what you might call ‘one nation banking’. We need banks that serve the real economy. We need banking serving every region, every sector, every business, every family in this country.”
The Labour leader warned of a return to “two nations”, the description of 19th century Britain used by Victorian Conservative prime minister Benjamin Disraeli.
The banking sector was on a path of “gradual separation from the rest of society”, he said.
“This is a call for banking to recognise that continuing on its current path will lead to further isolation from society, greater public anger, more years in which each payday is a newspaper headline. This is a call on banking to recognise that it should take the path of change, to recognise that it is not isolated from the economy or society.”
But Conservative backbencher Matt Hancock accused Mr Miliband of “just more empty rhetoric” and added: “Ed Miliband calls for responsibility from bankers but has refused to accept his part in the economic mess Labour created.
Sir Philip, who turned down a £1.4m bonus earlier this month, confirmed he signed off Mr Hester’s proposed package of £963,000 worth of RBS shares – which was 60 per cent of the maximum he could have received under a performance-related scheme – and admitted the RBS board “under-estimated” the public outrage which it would provoke.
Sir Philip said: “Pay has been high for too long, particularly in the banks, particularly in the investment banks. Shareholders have done pretty badly and employees have done pretty well over the last 10 years.
“That needs to be corrected. It isn’t a society or fairness issue, it is a straightforward business issue. Too much of the money is not going to the right place and the shareholder rewards have not been sufficient.”