THE Tories have been accused of trying to fill the pockets of "friends and donors" over prioritising the cost-of-living crisis after it emerged that they are considering scrapping the cap on bankers' bonuses.
Kwasi Kwarteng, the new Chancellor, is reportedly mulling plans to scrap the cap on bankers’ bonuses introduced by the EU in 2014 in what is thought to be a bid to attract more financial supremos to London.
But critics of the rumoured plan – which was first reported in Thursday’s Financial Times – have said it amounts to gifting cash to the super-wealthy while ignoring families “burdened with unmanageable levels of debt due to rocketing bills and food prices”.
Alison Thewliss, the SNP’s Treasury spokesperson, said: “If true, these shameful plans show once again that the Tories are more interested in putting more money into the pockets of their friends and donors in the City while turning their backs on ordinary households struggling across the UK.”
The plans have not been confirmed by the Treasury which has refused to comment on the basis the Chancellor will deliver a mini-Budget next week.
A 'Brexit dividend'?
Kwarteng is thought to have floated the idea at a meeting with City chiefs last week, including the heads of Goldman Sachs, Lloyds, HSBC and JP Morgan among others.
A source told the paper the move could be sold as a “clear Brexit dividend” and that scrapping the cap removes the risk of “pushing the best people to the US where they can get better paid”.
A Treasury source said the Chancellor has “been clear that he will take an unashamedly pro-growth approach to managing the economy”.
They added: “That means boosting growth rates, with an active supply side agenda to encourage investment, innovation, and entrepreneurship, and bolstering the competitiveness of the UK as a global financial centre.”
Speaking after the meeting, held last Wednesday, the Chancellor said: “We need to be decisive and do things differently. That means relentlessly focusing on how we unlock business investment and grow the size of the British economy, rather than how we redistribute what’s left.”
But the SNP have said the plans, should they go ahead, will see the Government “turning their backs on ordinary households struggling across the UK”.
Thewliss said: “The Tory-made cost of living crisis is spiralling out of control - with people being burdened with unmanageable levels of debt due to rocketing bills and food prices.
“Instead of delivering real and targeted support to protect households, the Tory government has instead sat on its hands and looked the other way.”
What is the 'Truss tax'?
The only policy announced so far explicitly targeted at tackling the cost-of-living crisis is assurances the average household will not pay more than £2500 annually for energy – a significantly smaller increase than what was expected but still a rise of more than £1000 in one year.
This will be guaranteed by the Government and paid for by increasing state borrowing, Liz Truss said last week.
But the announcement backfired when critics branded it the “Truss tax” and claimed it would saddle the taxpayer with billions in extra debt, sparking fears the burden could restrict future state spending.
Thewliss added: “While bankers rake in more money and energy companies make billions in excess profits, the only measure announced by the UK government for people is a multi-billion pound 'Truss Tax' on households and small businesses that will saddle them with years of debt.
"Westminster's failure is in stark contrast to the targeted plans being delivered by the SNP Scottish Government, which is benefiting low and middle-income families by increasing the Scottish Child Payment to £25 per child per week, freezing rents, freezing rail fares, and expanding universal free school meals.
"Scotland is an energy-rich country. If the new Prime Minister and Chancellor are more intent on helping bankers and forcing families to pay the price of this Westminster crisis they will prove, yet again, that independence is the only way to keep Scotland safe and build a fairer, more prosperous future."
City moguls have established links with the Conservative party, with the Guardian reporting in June this year that firms and individuals operating in the financial sector donated £11 million to the party over the pandemic – some 76% of the total donated cash to UK parties.
Gordon Brown’s government introduced a tax on bankers’ bonuses in the wake of the financial crash as public anger mounted over the bulging pay packets of those viewed as responsible for the credit crunch.
They were further tightened by EU legislation in 2014 which capped bonuses to be no more than twice a worker’s annual salary.
