CAPS on bonuses for fat cat City bankers are reportedly set to be scrapped and sold to the world as a “Brexit dividend”.
The new Chancellor Kwasi Kwarteng has argued the move would attract more financial firms to London and give the city a competitive edge against New York and Hong Kong, the Financial Times reports.
Bonuses were initially capped in the aftermath of the 2008 crash when public anger over the take-home pay of wealthy City workers reached boiling point.
EU legislation later limited bonuses to twice a bankers’ annual salary and this is the limit Kwarteng reportedly believes is hampering the UK’s global competitiveness against other financial centres.
The paper reports he told City chiefs last week: “We need to be decisive and do things differently.”
Other executives, quoted anonymously by the FT, said the move could be sold as a “clear Brexit dividend” and that scrapping bonus caps reduces the risk of “pushing the best people to the US where they can get better paid”.
Thursday’s FINANCIAL Times: “Kwarteng set to end cap on bankers’ bonuses” #TomorrowsPapersToday pic.twitter.com/0R7OfQsgGo
— Allie Hodgkins-Brown (@AllieHBNews) September 14, 2022
Kwarteng will deliver a mini-Budget next week, following the end of the national period of mourning for the Queen, but it is not known whether a move to end bonus caps will be included.
The paper reports that an announcement could come separately as part of a package of City reforms.
If the move is announced it is likely to draw fierce criticism from opposition MPs, including the Labour leader Keir Starmer, who has previously accused the Conservatives as seeking to usher in “pay rises for bankers, pay cuts for district nurses”.
Some within the Tory party not on board with Liz Truss’s professed growth agenda may also feel queasy about increasing pay for wealthy bankers while wages stagnate for others amid rising prices.
