Kwasi Kwarteng poised to scrap bankers’ bonus cap

People have highlighted the irony of lifting the cap on bankers' bonuses while advocating 'pay restraint' for workers

Kwasi Kwarteng portrait

The splash on the front page of the Financial Times today suggests that the new chancellor of the exchequer – Kwasi Kwarteng – is planning to scrap the cap on bankers’ bonuses. Introduced in 2014, the cap prevents bonuses being handed to bankers in excess of twice their salary.

According to the Financial Times, no final decision has been taken, but sources close to Kwarteng have said he wants the cap scrapped. The supposed rationale is that it would boost the UK financial sector’s ‘competitiveness’, and stimulate growth.

The touted move has been slammed – with many pointing out the irony of pushing to scrap the cap in the middle of a cost of living crisis, in which the government has criticised trade unions negotiating for pay rises which match inflation.

The Green Party of England and Wales finance spokesperson Molly Scott Cato said, “As many struggle to get by, government priority is to restore astronomical pay to bankers and encourage the return of risk taking for which we are all liable”.

The Daily Mirror’s associate editor Kevin Maguire tweeted, “Truss Tory UK Government axing the bankers’ bonus cap while squeezing wages of nurses, teachers, police, etc rewards her party’s backers. City slickers bankroll the Conservative Party (and were major contributors to her campaign to be installed PM).

And Labour peer Prem Sikka tweeted, “UK Chancellor considers scrapping bankers’ bonus cap as part of deregulation. It was introduced to curb reckless practices/frauds which boosted bonuses but wrecked the economy. Govt says wage rises are inflationary but bankers’ loot isn’t.”

General secretary of the TUC Frances O’Grady pointed out that city bonuses are already at a record high. She said, “Bonuses in the City are already at a record high. While City executives rake it in, millions are struggling to keep their heads above water.

“Working people are being walloped by soaring prices after the longest and harshest wage squeeze in modern history. The chancellor’s number one priority should be getting wages rising for everyone – not boosting bumper bonuses for those at the top.

“To get pay rising across the economy, the chancellor must deliver a plan for a £15 minimum wage, fund decent pay rises for all public sector workers and introduce fair pay agreements for whole industries. That’s how you boost pay packets in every corner of the country.”

Chris Jarvis is head of strategy and development at Left Foot Forward

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