Ministers threaten veto on bonuses

The Government toughened its position on City bonuses today by announcing it would hold a veto over payouts from banks bailed out by the taxpayer.

Treasury Minister Stephen Timms said the rescued banks would have to submit detailed proposals about which staff should get rewards for final approval by UK Financial Investments - the Treasury-run shareholder.

Mr Timms said: "As a large shareholder, UKFI will need to agree to those arrangements."

The shift is a reaction to public anger that despite needing to be the bailed out with taxpayers' money, banks have not opted to curb their excessive bonuses.

Royal Bank of Scotland, which was rescued to the tune of £20billion sparked fury when plans leaked out to pay up to £1billion in bonuses to 177,000 staff, including some six-figure sums.

Government sources did not rule out Tory leader David Cameron's proposal for a £2,000 cap on bonuses for junior staff.

Lloyds spokesman Shane O'Riordain said that the group's five executive directors had voluntarily given up their bonuses for last year.