New Chancellor ‘seeks to scrap cap on bankers’ bonuses’ to boost City
15 September 2022, 08:14 | Updated: 15 September 2022, 09:15
The new Chancellor is weighing up whether to remove a cap on bankers' bonuses as part of a shake-up of City rules.
Sources told the BBC and Financial Times no final decisions had been made, but added that Kwasi Kwarteng thinks such a move would make London more attractive to global banks.
Uncapped bonuses led to the excessive risk-taking that spawned the financial crisis of 2008, according to critics.
The Chancellor is understood to view the move as a way of making London more attractive to global banks. The City has long taken issue with EU-wide rules on banking bonuses that impose a cap at twice an employee’s salary.
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It comes months after then-prime minister Boris Johnson insisted he was not planning to ease restrictions on bosses' pay or lift the cap on bankers' bonuses as millions felt the strain of the cost-of-living crisis.
Mr Johnson said at the time in late June it remained "the plan" to raise corporation tax but sought to attribute the policy to then-chancellor Rishi Sunak amid suggestions of a policy rift.
When the idea was mooted in June, Labour leader Sir Keir Starmer described it as “pay rises for bankers, pay cuts for district nurses”. But senior Tories say Mr Kwarteng is “unashamedly” looking for ways to boost growth, the Financial Times reports.
Critics say uncapped bankers’ bonuses lead to a culture of risk taking that led to the financial crisis of 2008.
