THE UK Government has revived a policy from the short-lived Liz Truss administration - a scrap of the cap on bankers’ bonuses.
The Financial Times reported that the Tories would imminently ditch the rule which limits banker bonuses to double their annual salary.
The EU policy will be scrapped in an effort to improve the attractiveness of London post-Brexit, FT said, in reasoning which reflects words from Kwasi Kwarteng during his brief time as chancellor.
The new rules will come into effect from October 31, the Financial Conduct Authority (FCA) said.
The news has been greeted with anger, with the SNP saying the "shameful plans lay bare the priorities of Westminster".
Green MP Caroline Lucas said similar, writing: "In case you were wondering what this Govt's priorities were, look no further.
“Ministers are now planning to scrap the EU cap on bankers' bonuses.
“More money for city fatcats in the middle of a cost of living scandal – post-Brexit Britain in a nutshell.”
Economist Professor Richard Murphy also commented: “As if evidence was required that Tory UK is run for the benefit of bankers …”
The Treasury has distanced itself from the move, saying: “Decisions on renumeration in the banking sector are for the PRA (Prudential Regulation Authority) as the independent statutory regulator.”
When the cap on bankers’ bonuses was put forward by the Truss government, Labour leader Keir Starmer opposed the decision.
He told the Mirror in September 2022: “Removing the cap on bankers’ bonuses when people are really struggling to pay their bills shows the Tories are absolutely tone deaf to what so many people are going through.”
Starmer (below) had previously claimed the policy amounted to “pay rises for bankers, pay cuts for district nurses”.
Labour have since embarked on a mission to charm the City of London’s bankers ahead of the next General Election.
However, on Tuesday the party spoke out against the binning of the cap.
Darren Jones MP, Labour’s shadow chief secretary to the Treasury, said: “Rishi Sunak is marking his anniversary of becoming Prime Minister by pushing ahead with Liz Truss’ plan to axe the cap on bankers’ bonuses. When Truss says jump, Sunak says how high.
“At a time when families are struggling with the cost of living and mortgages are rising, this decision tells you everything you need to know about the priorities of this out of touch Conservative government.”
The FCA stated: “The bonus cap does not limit total remuneration but limits the variable remuneration a firm can pay relative to an individual’s fixed pay.
“This has the effect of limiting the proportion of remuneration that can be adjusted by risk and performance measures.
“The removal of the bonus cap gives firms the freedom to restructure their pay over time, within the framework of the regulators’ rules on variable remuneration which aim to better align remuneration with prudent risk-taking.”
The SNP's economy spokesperson at Westminster, Drew Hendry MP (above), said:
"These shameful plans lay bare the priorities of Westminster: they care more about filling the pockets of bankers than helping vulnerable households through the cost of living crisis.
"While bankers rake in astronomical sums of money, households across the UK are having to choose between heating their home or feeding their families.
"While the Tories sit on their hands and refuse to act, and Sir Keir Starmer's Labour Party mirroring their every move, people in Scotland are crying out for real change.
"However, only with independence can Scotland escape Westminster control for good, rid itself of the Tories, and build a fairer and wealthier country for all."
Scottish Greens economy spokesperson, Maggie Chapman MSP, said: “It is utterly grotesque and morally obscene that any government would allow this cap to be lifted.
"But doing so during a cost of living crisis where so many are suffering and when so many people are seeing their household budgets stretched to breaking point shows just how much contempt the Tories have for the people they are supposed to represent.
“It is yet another shameful legacy of Liz Truss, Kwasi Kwarteng and the disastrous experiments that they inflicted on our economy and our country. It sums up this Tory government’s commitment to entrenching the worst inequality.
“Any government with any shred of empathy or dignity would have reversed course on this decision long ago. I hope that even at this late minute the Tories reconsider and that Labour shows some principles and pledges to reverse course and bring back the cap.
“We need to build a fairer and more equal society than what came before, rather than cementing the worst aspects of it.”
