Bashing bankers profits no one in the long run When The Sunday Telegraph revealed three weeks ago that Stephen Hester, the chief executive of the Royal Bank of Scotland, was going to take his bonus, it started a heated debate - one that continues to increase in intensity and volume. Mr Hester's bonus, of almost £1 million, has caused particular controversy because RBS is largely owned by the state, making him incomparably better paid than other public servants. The rewards for those in the financial industry are so huge that it is never easy to persuade people they are justified - especially not at a time of economic stringency, when the state is having to limit spending in almost every area. The wrangling over the proposed benefits cap, as well as Nick Clegg's proposals to increase the income tax threshold (and pay for it by levying a mansion tax), shows how thorny and contentious the intersection between merit, reward and public policy can be. But the reality is that the financial sector generates colossal sums for the wider economy, both in the form of profits and taxation. Britain benefits from the City and its success - and to achieve that success, it needs to be able to attract the best people. This can only be done by paying the going rate. Just as a top football team will not be able to sustain its performance unless it pays wages similar to those offered by its rivals, so no bank or investment fund will survive if it cannot attract, and keep, the best talent. The decision by Sir Philip Hampton, RBS's chairman, to turn down £1.4 million in shares shows that the bank is sensitive to public feeling. But while we admire Sir Philip for his restraint, his case is not the same as Mr Hester's: the payment was part of the deal negotiated for Lord Davies, who was to have been RBS's chairman. Sir Philip was offered the same package when he accepted the post, but has since decided that this "golden hello" was not appropriate. As for his chief executive, he was handed one of the most difficult jobs in finance: to salvage a viable bank from the wreck of RBS and restore it to profitability. That is a task requiring extraordinary skill and expertise. Mr Hester has not returned RBS to profitability - who could, amid such economic turmoil? - but he has done a creditable job of turning it round. He will therefore receive, under his contract, an amount proportionate to his achievements (and to the considerable sums he has saved the taxpayer), to the tune of 60 per cent of the possible total. We do not expect everyone to agree that bankers or footballers deserve their high rates of pay: the contrasting views of our columnist Matthew d'Ancona, on the page opposite, and our Business Editor Kamal Ahmed, in his column in that section, show that reasonable people can take different views on the matter. But the British economy needs an efficient and effective financial sector - and it will not have one unless it can offer rates of pay that are competitive internationally. If not, the loss to the nation will greatly outweigh any proceeds from the present epidemic of banker-bashing.