Banks, apparently, are not waiting for new legislation to curb bonuses.  While I was at BusinessDesk’s birthday party in Leeds last week, I was told by a reliable source that state-controlled Royal Bank of Scotland was already discreetly doubling the salaries of those bankers it was most keen to retain.

Following my post on November 16, it should come as no surprise to anyone that banks are looking at ways to continue paying huge rewards to their star players.  But it should be left to shareholders – not governments – to determine (or at least endorse) what those rewards should be.  In the case of RBS, of course, we are the shareholders, so one wonders what Alistair Darling is doing about Royal Bank’s new remneration policy, or whether he even knows about it.  I suspect the answers to these questions are, respectively, nothing and no.

News that Gordon Brown is planning legislation to empower the Financial Services Authority (FSA) to control bankers’ bonuses typifies so much that is wrong with this Government.

First, the use of legislation to achieve its objective.  I’ve lost count of the number of new laws that New Labour has introduced since 1997, but it’s a staggering amount, compared with the number enacted by previous regimes.   It wouldn’t matter so much if they were wise, thought-through statutes, which achieved their objectives.  But invariably they aren’t and they don’t.  Too often it’s the law of unintended consequences that prevails.   But then the real objective – as opposed to the stated purpose – is often simply to send a message to the electorate.

And that’s what’s behind the fuss about bankers’ bonuses.  It has suited the Government to pin the blame for the sub-prime debacle and the subsequent recession on greedy bankers.  This has successfully deflected attention and blame from politicians in general and Gordon Brown in particular.  People forget that governments (in the US as well as the UK) were very happy for economic growth to be fuelled by unsustainable levels of Government spending and consumer debt.    It was Gordon Brown who created the (failed) tripartite regulatory regime for financial services.  It was Gordon Brown who justified the  obscene bonuses paid to bankers on the grounds that they boosted tax revenues. 

But that  was then.  Now the Government needs a scapegoat.  And bankers fit the bill.  Regardless of whether the bonuses are justified (and I strongly suspect they are not), legislation is not likely to stop them.  You have only to look back to the pay policies of the early ’70s to see that Government attempts to control wages ultimately fail.  The only real beneficiaries of this exercise in canutism will be the tax lawyers and accountants, who will devise any number of clever schemes to circumvent the proposed curbs.

There are, of course, ways in which excessive remuneration can be controlled.  These are in the hands of shareholders, the ultimate owners of every bank.  And, as it is the major shareholder in at least four of our largest banks, the Government already has the power it needs to veto big bonuses.   But that wouldn’t send the same message to the electorate – would it?

Why are we Brits so complacent about being mugged – especially when it happpens day in and day out, 365 days a year?

I’m prompted to ask because of the news that the European Court of Auditors has refused to sign off the EU’s accounts for the 15th year running.  Can you imagine the row in Parliament if the UK Government’s accounts were regularly rejected in this way?

And it’s not as if the sums are chickenfeed.  According to the Treasury, the UK contributes almost £10bn a year to the EU’s budget (after the rebate)  Of this, we get back about £5.2bn on average.  However, our net contribution is projected to rise to £6.4bn in 2011-12.  I reckon this works out at something like £105m per year for each man, woman and child. More money than most of us are likely to spend in our lifetime.

Nobody enjoys paying taxes, but we endure it if we believe the money is being spent on worthwhile causes, such as hospitals, schools, pensions etc. But much of the money we pay to the EU is clearly being wasted.

Open Europe has produced a list of examples of EU waste. These include 2,500 euros spent on the chairman of Porsche’s hunting lodge, 850,000 euros on a “gender equal” wood design centre in Sweden, 198,000 euros for a puppet theatre network in the Baltics and a bizarre art education project called Donkeypedia in which a donkey travels through the Netherlands and is met at various locations by primary school children.  Incredible.

Having been part of last year’s ultimately unsuccessful campaign (although we won the argument) to persuade the Government to honour its manifesto promise to hold a referendum on the European Constitution (aka Lisbon Treaty), I dread to think what further pointless schemes we are now going to find ourselves paying for. 

If we really have to belong to the EU, then let’s find a way to make it accountable.