Labour to back bankers’ bonuses: How the Left responded

Rachel Reeves has said she has ‘no intention’ of re-establishing the cap.

Rachel Reeves

Labour will not reinstate a cap on bankers’ bonuses if it wins the next general election, the shadow chancellor announced this week. Saying she wanted to be the ‘champion of a thriving financial services industry,’ Rachel Reeves said she had ‘no intention’ of re-establishing the cap.

The bankers’ cap, which limits yearly bonus payouts for bankers to twice their salary, was introduced by the EU in 2014. It is aimed at preventing excessive risk-taking following the global financial crash of 2008.

The legislation was scrapped as part of Kwasi Kwarteng’s mini-budget in 2022. In rewarding bankers during a cost-of-living crisis and growing levels of poverty in Britain, the decision ignited widespread criticism.

Despite the outcry, the policy was maintained under Rishi Sunak, and came into force in October 2023. The move was lambasted by unions, which said the prime minister was fuelling a ‘greed is good’ culture in the City of London.

Talking to the BBC on January 31, Reeves said: “The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances.

“But that has gone now, and we don’t have any intention of bringing that back. And as chancellor of the exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK.”

The announcement sparked criticism among the political Left.

Labour’s grassroots left-wing organisation, Momentum, described it as a “terrible decision,” which is “totally out of touch with Labour’s values and public opinion.”

“For over 40 years our economic model has sucked wealth from the country and enriched a few in the City.

“It even crashed the economy in 2008. Yet instead of learning the lessons from New Labour’s failures, Starmer and Reeves seem determined to repeat them.”

The Peace & Justice Project, founded by the former Labour leader Jeremy Corbyn, said:

“Labour’s latest U-turn, the refusal to reinstate the cap on bankers’ bonuses, shows it is unwilling to challenge the establishment status quo…”

In a post on X, Corbyn asked: “Where is the justification for letting the rich get richer while children starve and people sleep rough on the streets?

“We cannot afford these obscene levels of inequality. It’s our job to offer a real alternative – one that puts human need before corporate greed.”

Left-wing political commentator Owen Jones said: “Labour will keep a Tory cap on struggling families, which drives hundreds of thousands of children into poverty.”

Defending the move, a Labour spokesperson said: “We are not in the business of telling business what to do about pay and conditions.”

Gabrielle Pickard-Whitehead is a contributing editor to Left Foot Forward

Image credit: Creative Commons, Chris McAndrew

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