THE UK remains in the grip of a cost-of-living crisis. But not everyone will be worried about how to make ends meet amid persistently high inflation and rising interest rates.

Indeed, as has been reported in recent days, big bonuses are very much in vogue in the City of London – even where it is unclear if the largesse is merited.

There was outrage when the boss of British Gas owner Centrica declined to say whether he would waive a bonus this year that could be worth up to £1.6 million. It came as the energy company reported that profits had tripled to a record £3.3 billion, driven to a large extent by the surge in energy prices triggered by Russia’s war on Ukraine.

Centrica chief executive Chris O’Shea waived a bonus worth £1.1m last year as household fuel bills began to soar but said last week that it was “too early to have a conversation” about his potential pay-out this time. It prompted Simon Francis of the End Fuel Poverty Coalition to appeal to Mr O’Shea to “look at his conscience”, particularly given that Centrica was recently forced to apologise after it emerged subcontractors employed by the company had broken into people’s homes to force-fit energy meters.

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Unsurprisingly, the “monster” profits reported by Centrica, which followed record results from oil giants BP and Shell, have drawn plenty of criticism, and have led to calls for the UK Government to further increase the windfall tax on these extraordinary profits.

Unite general secretary Sharon Graham will likely have captured the views of many when she declared last week: “British Gas owner Centrica has been coining it in from our massive energy bills while sending bailiffs to prey on vulnerable consumers the length and breadth of the country.

“These energy companies are showing us everything that is wrong with the UK’s broken economy.”

That companies like Centrica, which has its energy generation business to thank to a great extent for its bumper profits, have benefited so much from the market forces arising from the conflict in Ukraine has rightly angered many. It is certainly a gross spectacle to see giant corporations generate such vast profits – seemingly through no direct action of their own – while thousands of people worry about whether they can afford to heat their homes.

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It is most certainly not a good look when their senior executives are receiving huge bonuses when so many are struggling.

And it is not only bosses at big energy companies who are laughing all the way to the bank amid the economic circumstances the UK finds itself in.

NatWest Group, owner of Royal Bank of Scotland, revealed on Friday that chief executive Dame Alison Rose will be paid a total of £5.2m for 2022, up from £3.6m the year before. That came as the bank announced profits had increased by more than one-third to £5.1bn, which was driven to a large degree by the Bank of England increasing interest rates to curb inflation in recent months.

It would be wrong and simplistic to attribute the bank’s success solely to the rise in interest rates. The post-Covid economy has brought new pressures to households and businesses as inflation has spiralled, requiring banks to again find ways to support customers during difficult times.

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But there can be little doubt that the higher cost of borrowing played a significant part in driving up NatWest’s income last year. And with executive remuneration linked to the performance of the bank, Dame Alison and Katie Murray, chief financial officer, have benefited from the higher base rate, which has climbed from 0.1% in December 2021 to 4%, as of the most recent vote by the Bank of England's Monetary Policy Committee.

Speaking to reporters, NatWest chairman Sir Howard Davies mounted a staunch defence of the amounts paid to both Dame Alison and Ms Murray, which followed the introduction of a new remuneration policy that he said was strongly supported by shareholders at the bank’s annual meeting last year.

The new policy reintroduced bonuses for senior executives at the bank for the first time since its £45.5bn bailout by the UK Government during the financial crisis of 2008 and 2009.

In the years that followed the bailout, remuneration packages for senior leaders at NatWest were built on several components, with a base salary, fixed share allowance, and a long-term incentive award accounting for the bulk of pay. Last year, however, NatWest ushered in a new policy that restored bonuses.

Robert Gillespie, then chairman of the bank’s group performance and remuneration committee, said at the time the policy was introduced that the bank was “nearing the end of its long process of normalisation and the Government continues to sell its shareholding which will result in a normalised shareholder base”.

That process continued yesterday, when it was announced that the Government shareholding in the bank had been reduced to 42.95% from 43.97%.

In essence, the top brass at NatWest believed the time had come for the bank to start competing with its peers on pay to help it attract and retain talent.

When asked about Dame Alison’s pay for 2022 on Friday, Sir Howard said: “We think this is a totally appropriate level of remuneration for our senior people.”

Dame Alison is not the only banker taking home bumper pay. This week, it emerged that the pay of HSBC chief executive Noel Quinn had increased to £5.6m from £4.9m. Charlie Nunn, boss of Lloyds Banking Group, received remuneration of £3.8m for 2022, according to the bank’s annual report. This was down from £5.5m for 2021, which included a golden hello worth £4.2m when he joined from HSBC. Yesterday, Lloyds reported profits of £6.9bn for 2022, with the rise in interest rates helping to lift income by 14% to £18bn.

These figures might well be the norm at the top of the corporate tree. But they are a world away from the struggles so many people are currently facing day to day. It seems some executives are benefiting excessively as a result of factors that are not of their own making.