Rishi Sunak’s Tory government has approved the lifting of the cap on bankers’ bonuses. This means that the rule which saw firms limiting bonuses to a maximum of twice a person’s salary is being scrapped. Predictably, there’s been uproar – not least because the decision looks like a political one.
Bankers’ bonuses: unfettered, once more
As Sky News reported:
The policy change was initially announced by former chancellor Kwasi Kwarteng in the infamous September 2022 mini-budget of the Liz Truss premiership.
Current chancellor Jeremy Hunt and Sunak have kept the policy. Or rather, the Bank of England’s Prudential Regulation Authority (PRA) and the Financial Conduct Authority have said they will lift the cap – and the Tories have greenlighted it. It will come into effect on 31 October – and also hit this financial year’s pay packets for bankers.
As the Financial Times (FT) reported, government thinking is that it will make the UK more competitive and give firms greater flexibility. Without a shred of irony – considering the government brought the cap in to try and stop rogue bankers from taking financial risks – the PRA also said it would give firms more financial stability.
Predictably, non-bankers have hit back.
‘Obscene’ Tory move
Luke Hildyard, executive director of thinktank High Pay Centre, told Sky News:
The UK already has more millionaire bankers than the whole of the EU put together yet our economy is stagnant and our public services are in crisis.
Whether or not the bonus cap was an effective policy measure, we can’t rely on the outsized incomes of a handful of super-rich bankers trickling down to lift slumping living standards for the wider population.
Trades Union Congress (TUC) general secretary Paul Nowak said:
This is an obscene decision.
City financiers are already enjoying bumper bonuses. They don’t need another helping hand from the Conservatives.
At a time when millions up and down the country are struggling to make ends meet – this is an insult to working people. Rishi Sunak has shown once again that he is more interested in feather-nesting the super-wealthy than helping struggling families. Rampant inequality will do nothing to boost growth or competitiveness – it will just hold our economy back.
This is why we need to have a national conversation about taxing wealth properly in this country. It is time for those at the top to pay their fair share.
And others have hit out, too. Lawyer and campaigner Peter Stefanovic blasted the Tories on Twitter, pointing to newly-released destitution figures:
On the same day we learn the shocking news that one million UK children experienced destitution last year we hear Rishi Sunak is pushing ahead with Liz Truss plan to scrap cap on millionaire bankers' bonuses. Has the penny, finally, dropped https://t.co/fkdqTh6tic
— Peter Stefanovic (@PeterStefanovi2) October 24, 2023
As the Canary previously reported, since 2017 governments have presided over a 148% increase in destitution. The Joseph Rowntree Foundation (JRF) found that, in 2022, 3.8 million people were destitute at some point, up 61% since 2019. This figure includes around one million children – up a whopping 88% since 2019.
However, most shockingly, these figures represent a 186% increase in destitution for children. Looking at the detail, the JRF found that it was marginalised communities that successive governments had been failing the most. For example, 62% of people who were destitute were chronically ill or disabled.
‘Brutal and arrogant’
So, when the rest of us are on our knees, the Tories decide to reward millionaires. Journalist Dave Sumner Smith summed it up – calling the Tories’ move “brutal and arrogant”:
The @Conservatives really don't get it, do they?
Announcing the scrapping of limits on bankers' bonuses on the same day it's revealed that the number of destitute people has doubled in the last 5 years.
That's more than insensitive or callous.
It's brutal & arrogant. pic.twitter.com/UJSiPpvkhO
— Dave Sumner Smith (@davesumnersmith) October 24, 2023
Of course, speculation is rife as to why Sunak has kept this policy which was formed under Truss. Some pointed out it might be to “appease” her wing of the Conservative Party. Others noted the Tories were running the country for the “benefit of bankers”. What’s also likely is that Sunak is eyeing support for the Tories from the financial services sector in the next general election.
Let’s not forget that it’s the Tories’ fault the economy is failing in the first place – and by giving bankers a free-for-all, Sunak has done nothing to appease the notion that he serves only the interests of the rich.
Featured image via David Iliff – Wikimedia, resized to 770×403 under license CC BY-SA 3.0
