Which – as Benedict Brogan suggests in an insightful post over at the Telegraph – is hardly an ideal situation for the coalition. They face a poll this morning that puts the Tories 8 points behind Labour, and the Lib Dems a further 22 points behind that. News that they aren't hunting down the banking bête noire, and impaling it against higher taxes, is unlikely to improve those numbers.
There are, though, some consolatory factors for Cameron & Co. By far the most important is that, even as it stands, all those bonus payouts will accrue money at a considerable rate for the Exchequer – so, the bigger the bonus pot, the bigger the Treasury's windfall. And we should also remember the words of Alistair Darling, who admitted that Labour's bonus tax had failed to change bankers' behaviour. Tax or no tax, bonuses will be paid out in one way or another. Tax or no tax, the government will probably get scorched by the fallout. As one No.10 source tells the Telegraph, "Whatever the bonuses are – if they are £7 billion of £3 billion – they will be too big. We are going to get flak and we accept that."