I’m confused by the news that Northern Rock employees are going to be given a 10% bonus, partly at the cost of the taxpayer – frankly, it smacks of double standards. It was only recently that Gordon Brown was urging a crackdown on big city bonuses in an attempt to curb excessive risk taking.
I accept that the average employee at Northern Rock is not in a position to take the same risks as a city trader, but the government and it’s supporters cannot have one set of rules for investment banks and one set for itself. Only in September were the unions claiming that we should “Tax the bonus system out of existence". But now they are supporting the bonuses given to Northern Rock staff claiming that they "worked exceptionally hard in extremely difficult circumstances … they have experienced the loss of friends and colleagues through compulsory redundancy yet have continued working solidly with dedication and commitment."
Northern Rock failed at the taxpayers’ expense. The government has overlooked the fact that parts of the financial sector has still been making massive profits in the last year, for example, the Foreign Exchange markets. By rewarding Northern Rock the government is essentially rewarding failure. This is not the correct signal to be sending out to the market.