British unions and lawmakers are outraged over the huge £963,000 ($1.5-million) bonus awarded to the chief executive of taxpayer-backed Royal Bank of Scotland, Stephen Hester.

RBS is 82 percent-owned by the British taxpayer following huge bailouts totaling £45.5-billion during the height of the financial crisis in 2008 and 2009.

London mayor Boris Johnson called the bonus paid to Hester as "absolutely bewildering," while the leader of the opposition Labour Party Ed Miliband blamed Prime Minister David Cameron for allowing it to happen.

Other opposition figures and union bosses charged that the bonus showed that Cameron has no intention of pressuring banks to cut bonus payments.

Liberal Democrat Jeremy Browne, a Foreign Office minister, has openly called on Hester to reject the bonus in the interests of the taxpayer.

Browne told BBC that Hester made in three days what a British soldier fighting in Afghanistan earns in a year.

"I think he should reflect on that,” he said. "He is working for a company which is five-sixths owned by us, the taxpayer, and I think he has to think like a public servant, not like someone who's there to line their own pocket. He needs to think like a public servant who has a duty to his country, not just his own wealth." No one's forcing him to take this money. He could struggle on with £1.2-million [Hester’s base salary]."

Similarly, Shadow business secretary Chuka Umunna also criticized the bonus.

“I don’t think I would have paid any bonus in these circumstances,” he told BBC Radio

“This is a bonus being given by way of shares, so Mr. Hester may well get well over one million pounds. The government is the main shareholder here and ministers have said that shareholders should play are more active role in reining in excess where they see it. In the main this is a publicly-owned institution and the Prime Minister and others have failed to do so. People will be flabbergasted that nothing has been done about this.”

Umunna added: “Stephen Hester has done a good job but that’s what most of us are paid to do in our usual jobs. When we receive a salary we are paid to do a good job. You receive a bonus when you have done something out of the ordinary, something that bit extra… RBS wouldn’t exist if it wasn’t for the British taxpayer.”

Union leaders fulminated that the bonus to Hester comes amidst severe job cuts and pay freezes for millions of public sector workers.

"What planet does Stephen Hester and his banking chums live on?” said David Fleming, the national officer of the Unite union in a statement.

"Taking almost £1 million from taxpayers' pockets as a bonus is utterly disgusting and offensive to every working person across the country. How can a Royal Bank of Scotland senior banker who is responsible for sacking over 21,000 workers be rewarded in this way?"

Brendan Barber, the general secretary of the TUC union, declared: "Ordinary people facing the biggest squeeze in their living standards for decades and businesses desperate for credit will not understand why Mr. Hester should get such a huge bonus. The Government has been lecturing public servants about how they must accept a pay freeze and a big increase in pension contributions. They seem to have made an exception for Britain's best paid civil servant."

Bob Crow, general secretary of the RMT union, stated: "The Royal Bank of Scotland is owned by the country. To give someone £1m and then to give them a massive bonus on top, while public sector workers get a pay freeze and their pension contributions go up, I have got to say that is a complete disgrace. What a kick in the face to those people who deliver a public service for our people in this country."

In a statement, the Prime Minister's office seemed to deflect blame on the previous Labour government.

"There is a contract in place, that contract was put in place by the previous Government,” said Number 10.

“Under that contract he's entitled to be considered for a bonus in good faith and that bonus judgment is taken by looking at his performance against current objectives. That process is what happened here. It's a decision that was taken by the board of RBS. The Government had views on the bonus and it expressed those views and [UK Financial Investments Ltd, the company set up by the government to manage its bank shareholdings], which holds the public sector stake, was involved and took a keen interest in this issue."

However, Hester has at least one powerful government official on his side.

Chancellor of the Exchequer George Osborne defended the bonus, citing that it was the purview of the Bank to determine its chief’s payment, not the government.

“In the end [Hester] was hired after the crash to sort out the problems at RBS. He was asked to shrink – by my predecessor – the size of its balance sheet and the size of its workforce,” Osborne told reporters while attending the World Economic Forum in Davos, Switzerland.

"[Hester] is doing those things and in the end under the arrangement we have created it has got to be up to the board to make a decision on the bonus that he receives."

The Chancellor explained why the government is unwilling to intervene in RBS’ pay schemes.

“The arrangement under which we manage it allows it to have a board that is independent; allows it to respect the right of minority shareholders,” he said.

"If we were to intervene – as some have argued we should – and we didn’t do it in [an] open would flout every law about shadow directorships.”

According to reports, Hester’s bonus could have been much higher – the payment he will receive was about 60 percent of the maximum allowed under his employment terms.

In addition, Ruth Bender, a member of the faculty at the Cranfield School of Management, defended Hester's bonus.

"We need to pay him that bonus because we can't afford for him to leave and a million pounds isn't very much to pay to retain him in a very demanding job which everybody says he's doing very well," she told UK media.

One American academic also defended the bonus.

“I think like in the U.S. people [in Britain] are looking for a villain -- someone who can be blamed for the tenuous state of our economies and the financial and housing crises,” said Sean M. Snaith, a professor of economics at the University of Central Florida”

“It is always easier to put a black hat on someone and blame them for our troubles. While banks and others in the financial system played a role in the crises, there is plenty of blame to go around. Politically, bankers have become an expedient whipping boy being used by politicians and the public at large.”

Snaith also added: “The bonus [paid to Hester] is in stock and it is deferred to 2014. He took over after the crisis and is in a very difficult position. I would think that you would want the best person for the job in the position, not the cheapest.”

Moreover, according to Bloomberg, Cameron feared that Hester would quit if he were denied the bonus payment.

Osborne, however, acknowledged the public’s frustration with Hester’s pay package, noting that it is "difficult to justify the levels of pay in financial services compared to other industries" but also added that it is "an issue for the financial services industry to ask itself about.”

Indeed, some UK banks chiefs, including Antonio Horta-Osorio, the CEO of Lloyds Banking Group Plc, said he would not take a bonus for 2011.

Victoria Honeyman, a political lecturer at University of Leeds, commented: “the bonus being paid out is actually in share options and the final worth of these options will not be confirmed for three years. It seems that the government is keen not to unsettle the board at RBS by making demands, and there is also some suggestion of legal constraints to control over bonuses, which were accepted by the previous Labour government.”

Honeyman added: “None of the three main parties are blameless in this, and while big bank bonuses are hugely distasteful, at this time particularly, the bank is in profit. The easiest way out for everyone would be for Stephen Hester to decline his bonus.”