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Network Rail bonuses cannot be vetoed, says Downing Street

Transport secretary will vote against directors’ bonuses, but Downing Street says Labour is wrong to say she can block them

Downing Street has promised measures to improve corporate governance at Network Rail and continued to insist the transport secretary, Justine Greening, will vote against directors’ bonuses proposed at a general meeting this week.

The government also suggested it might appoint a special director, as it is entitled to, on the five-strong remuneration committee.

But the government continued to contest Labour’s claims that it had powers under the articles of association to veto the bonuses.

The latest episode in the responsible capitalism debate will spill over into a broader debate on bonuses being called by Labour on Tuesday in the Commons.

Downing Street insisted it was not going to comment on every bonus being taken by prominent businesspeople.

Ministers joined calls for the RBS chief executive, Stephen Hester, not to take his bonus last week, but said the chief executive of Barclays, Bob Diamond, was in a different category since his bank, unlike RBS, was not in receipt of direct public subsidy or in public ownership.

Conservative MP Matthew Hancock said: “Labour’s attack on Network Rail bonuses has backfired after it has been exposed that they never intervened to stop bonuses themselves, and the powers they claim do not in fact exist.

“They are simply wrong to claim that the government could veto Network Rail bonuses by appointing a special director to the remuneration committee. Labour never used the power to appoint a director during their time in office, and even if this government did, it would not have any powers to overrule the rest of the remuneration committee.

“Labour are also wrong to claim that the articles of association mean that the secretary of state must give written consent to approve bonuses. Written permission is needed to change the whole system under which bonuses are awarded – but there is no suggestion of Network Rail wanting to change this and no permission from the secretary of state has been sought. But no written consent is required for individual bonuses.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds