Labour to force Commons vote on stripping Hester bonus
Labour says it will force a Commons vote calling for RBS chief executive Stephen Hester to be stripped of his near-£1m bonus.
It will hold a debate early next month to pressure the government over the £963,000 shares-only payment.
Although not binding, the vote could put the coalition under further pressure to intervene.
The government said it would have caused "chaos" if it had blocked the bonus at the part-publicly owned bank.
A Labour source told BBC political correspondent Vicky Young that David Cameron and the government had failed to act and it was right for Parliament to voice its opinion.
He said this was "one of those moments" when the public was so outraged that Parliament had to assert itself.
Labour can hold a debate on an issue of its choice on one of its allocated "Opposition Days." The next one is scheduled for the week after next.
The coalition is free to ignore the result but it could be uncomfortable for some Lib Dem and Conservative MPs, our correspondent says.
'Up to him'
Earlier on Sunday, cabinet minister Iain Duncan Smith said there would have been "chaos" if the government had overruled RBS over the bonus.
Speaking on BBC One's Andrew Marr Show he said it was for Mr Hester to decide whether or not to take his bonus.
"Nobody would be happier than the government if he took such decisions. But it's up to him."
He argued that Mr Hester's contract, drawn up under the previous Labour government, meant that the RBS board took the bonus decision.
"If we didn't like that, of course the only option would be to get rid of the board," he said.
"If you do that, imagine what would happen in the banking sector and imagine what would happen to RBS. You would have chaos."
Mr Hester was appointed as the Royal Bank of Scotland's chief executive at the end of 2008 to replace Sir Fred Goodwin, after the bank had to be bailed out by the government, which now owns 82% of the bank.
The bank said the bonus was to recognise his "substantial progress in making RBS safer, rebuilding performance in many businesses and improving customer service and support".
But news of the bonus - to be paid in share options currently worth £963,000, deferred for three years - has annoyed people across the political spectrum.
The coalition's Lib Dem Chief Secretary to the Treasury Danny Alexander, was asked on the BBC's Sunday Politics whether the government had considered stopping the bonus.
He said they had given RBS a "strong steer" that they had wanted a big change - and had "looked at all the options" to use their influence. The bonus was less than half what it had been last year, he added.
But he said while it had been "politically less convenient" for the government, the alternative was worse.
To have taken direct control over RBS posed greater risks for the "tens of billions" of pounds of taxpayers' money tied up in the bank, he said.
Mr Alexander was not able to confirm if the board had threatened to resign. He said he had not spoken to members of the board directly because the taxpayer's stake in RBS is actually overseen by the arm's length body, UK Financial Investments.
"The view that we took was that by ripping up the terms of the relationship... we would put at much greater risk the very serious amounts of taxpayers' money that are tied up in this bank."
'Loath to act'
Labour reject the government's claims that its hands were tied by Mr Hester's contract.
Shadow Work and Pensions Secretary Liam Byrne told the BBC's Sunday Politics that a bonus "might be appropriate but certainly not a bonus on this kind of scale".
He said he believed that the government should block the payment.
"The government should be saying to the board, look, we helped put this board in place because the taxpayer owns the company, surely you must see that a bonus on this kind of scale is just not appropriate right now?"
Scotland's First Minister Alex Salmond blamed both Labour and the Conservatives for the situation.
He said: "I believe the Westminster parties are culpable - Labour made this arrangement in the first place.
"The Conservatives, after calling on shareholders and private companies to do something, seem loath to do something themselves."