Bankers already pocketing as much as £120,000 in bonuses, analysis reveals
As the “obscene” decision to lift the bankers’ bonus cap comes into action today, the trades union body has blasted the Tories for fuelling a “greed is good” culture in the City.
Bankers bonuses had previously been capped to twice a worker’s salary, however the government has from this Tuesday removed this cap, a policy move blasted a “bitter pill” at a time when millions are struggling with a cost of living crisis and food bank demand surges to record levels.
The Trades Union Congress (TUC) highlighted the irony where ministers have repeatedly called for pay restraints for most workers including public servants, whilst are now giving the green light to excess wage growth in the City.
Even before the cap on bankers’ bonuses is lifted, bankers on average have been able to pocket up to £120,000, new analysis from the TUC found. This equates to nearly four times the average wage for all workers (£32,414), whilst also equalling seven times the average £17,780 salary of a care worker.
Whilst CEOs and higher paid executives have already been able to gain bonus payments of up to £500,000, the TUC highlighted, which will now be unlimited leading to the return of bumper rewards in the City.
The decision was first announced by former chancellor Kwasi Kwarteng, who worked in banking himself as a financial analyst for JP Morgan, before turning his attention to politics.
The cap was initially introduced in 2014 by the EU to curb excessive risk-taking following the 2008 financial crisis, however the Tories chose to scap it as a post-Brexit financial policy shake-up.
A recent YouGov poll found 63% of the public oppose the removal of the cap on bankers’ bonuses.
Paul Nowak, general secretary of the TUC said the decision will only make “rampant” wealth inequalities worse, at a time when working people are facing the longest pay squeeze in modern history.
“The Conservatives are presiding over the worst cost of living nightmare in generations. But as millions struggle to cover the basics, executive bankers are now being given unlimited bonuses,” said Nowak.
“City financiers are already raking it in. They don’t need another leg-up from the Tories.”
Nowak said Sunak was following in the footsteps of short-lived Tory leader Liz Truss by, “feathering the nests of the wealthiest while turning his back on working people.”
In the wake of the decision, the trade union body has called for an urgent conversation around a wealth tax and for a debate on wealth inequality.
“Rampant inequalities already blight every corner of the country. This decision will just make things worse – and do nothing to boost growth or competitiveness,” said Nowak.
“We need a reset – and an economy that delivers better living standards for all – not just those at the top.”
Hannah Davenport is news reporter at Left Foot Forward, focusing on trade unions and environmental issues
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