Northern Rock staff to get 10 per cent bonus

NATIONALISED bank Northern Rock today paid its staff a 10 per cent bonus — funded by the taxpayer.

With its 4,000 employees earning an average of £22,000, the windfall amounts to a total of £8.8 million.

The average bonus appeared to be £2,000 but senior bankers were expected to get much
bigger sums in line with their salaries.

Lib-Dem Treasury spokesman Vince Cable said: "This seems an extraordinary action from a state-owned bank which still owes billions to taxpayers. When millions of people are facing pay cuts, or worse unemployment, this seems extremely crass."

The Newcastle-based lender announced the bonus on the day unemployment soared by nearly 80,000.

Northern Rock was bailed out by the Treasury last year with a £27 billion loan. It pledged to repay the cash as soon as possible and to date has handed back £15 billion.

Under an "employee incentive" scheme agreed with the Government, its staff get a bonus if they are ahead of schedule in repaying the cash.

But the bank has been attacked for its aggressive plan of repossessions and this week was forced by ministers to stop its programme of cutting back on mortgage lending.

A Northern Rock spokeswoman confirmed that the 10 per cent bonus was being paid this Friday to all staff. However, she stressed that the bonus was set up last year and that a change of policy could result in the end of the scheme in future. "Given the current economic climate, we will obviously be reviewing our business plan," the spokeswoman said.

Shadow chief secretary to the Treasury Philip Hammond said: "Once again, the confusion in government policy is exposed.

"The state-owned Northern Rock is paying millions in bonuses to its staff, while Gordon Brown boasts of a banking bonus crackdown — just days after the Government reversed the policy of shrinking Northern Rock, that they are being rewarded for delivering."

It came as MPs and shareholders called on high street bank chiefs to hand back tens of millions of pounds of bonuses paid out as a reward for their "success".

At least £143 million in bonuses has been handed over to bank directors since 2003 — the year that concerns about "irresponsible lending" first began to be widely aired.