Cameron Vows New RBS Restraint On Bonuses
The average pay of staff at Royal Bank of Scotland (RBS) should be reduced as well as the overall level of rewards, David Cameron said on Thursday as he escalated the row about remuneration at the taxpayer-backed lender.
Speaking to Sky News at the World Economic Forum in Davos, the Prime Minister went beyond a pledge made in the House of Commons last week to restrict the aggregate pay-and-bonus pool at the bank to below last year's sums.
He said: "With our particular responsibility for RBS, I can tell you that I don't only want to see the level of pay and bonuses come down overall, I want to see it come down per-person, per-capita as well."
Mr Cameron's comment came as Sky News disclosed that the agency responsible for managing taxpayers' stake in RBS is considering abstaining on a vote that would allow the bank to pay out up to double the level of employees' salaries in bonuses.
The Prime Minister said that new European rules on bankers' pay, which the Government is challenging, could exacerbate the riskiness of banks.
He said: "This European directive... in some ways might make things worse, because you could see rates of pay go up.
"You can claw back a bonus, the taxpayer can get the money back. You can't claw back [basic] pay."
Mr Cameron refused to be drawn on the problems engulfing the Liberal Democrats relating to sex claims made against MP Mike Hancock in 2012.
"I'll leave Nick Clegg and his team do deal with his party's problems," he said.
"What I would say is that here in Davos, where I'm here to fly the flag for Britain and attract investment to our shores, I would say we have a strong and stable government that is pursuing a long-term economic plan that sees Britain now as one of the fastest-growing countries in the western world, with unemployment falling, a great place to invest."
In a speech on Friday, Mr Cameron is expected to announce a new initiative to encourage British companies to move overseas manufacturing jobs back to the UK - a process known as reshoring.
He said: "What we're seeing is a trend where there are more businesses now who are thinking about bringing manufacturing and production back to Britain than are thinking of taking it out of Britain.
"Now that is a trend that I want to encourage. We're only going to encourage it if we continue to keep business taxes low, we continue to train apprentices, we continue to be a pro-enterprise government, we continue to welcome business and investment to our shores."
The sidelines of the Davos conference have included a series of comments from multinational investors in the UK that such investment is at risk if Britain leaves the European Union.
Mr Cameron denied that the Government's stance on EU membership was jeopardising inward investment, saying that companies had been "voting with their feet".
He said: "The argument I make with these business leaders is that the best thing for Britain would be to secure our place within a reformed European Union.
"Simply saying 'let's hope this issue goes away, let's hope that Europe sorts itself out', without doing anything, won't work.
"We need to get in there, change Europe, make it work better, make it more competitive, make it more flexible - help make Britain more comfortable with its membership, have that referendum and then settle this issue."
The Government has been buoyed in recent days by positive economic news including a further fall in unemployment and an upgrade to the International Monetary Fund's annual GDP forecast.
Mr Cameron said he was unconcerned at the prospect of an earlier-than-expected interest rate rise, insisting that the Bank of England should take the decision it believed was right for the long-term health of the economy.
He said: "I remember the days when interest rates were a political football, it was a disaster for the British economy.
"I think Mark Carney [the Bank of England Governor] is doing an excellent job - we must let him do his work.
"The Government's responsibility is to make sure we continue to make sure we get the budget deficit down, because whatever level they are there is a danger, if you don't deal with your deficit, that you face a higher interest rate."
The Prime Minister also echoed recent remarks by George Osborne, the Chancellor, that the economy was still "on the mend".
He said more work was required to fix the banking system and to ensure that the recovery was balanced.
"In the last set of figures we saw manufacturing growing, we saw construction growing," he said.
"I want this as a rebalanced economy that benefits north and south, rich and poor, everyone in our country.
"That's absolutely vital and that's what our long-term plan is about."
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