• Privacy policy
  • T&C’s
  • About Us
    • FAQ
  • Contact us
  • Guest Content
  • TLE
  • News
  • Politics
  • Opinion
    • Elevenses
  • Business
  • Food
  • Travel
  • Property
  • JOBS
  • All
    • All Entertainment
    • Film
    • Sport
    • Tech/Auto
    • Lifestyle
      • Horoscopes
    • Lottery Results
      • Lotto
      • Thunderball
      • Set For Life
      • EuroMillions
No Result
View All Result
The London Economic
SUPPORT THE LONDON ECONOMIC
NEWSLETTER
The London Economic
No Result
View All Result
Home Politics

‘Culture of greed’ will return to the City after chancellor scraps bonus cap

Lawyers who led litigation following the 2008 crisis warned that the decision risks re-introducing a culture of greed that preceded the financial crash.

Jack Peat by Jack Peat
2022-09-23 12:46
in Politics
Credit;PA

Credit;PA

FacebookTwitterLinkedinEmailWhatsapp

The Chancellor’s decision to axe the cap on bankers’ bonuses has been met with backlash amid fears it will see the return of a “culture of greed” in the City as Britons suffer from a deepening cost-of-living crisis.

The controversial decision will remove the limit on bankers’ annual pay-outs – which has been capped at 100 per cent of their salary, or double with shareholder approval – introduced by the European Union after the 2008 financial crisis.

Kwasi Kwarteng said the move would encourage global banks to create jobs, invest, and pay taxes in the City.

Pay in bonuses aligns the incentives of individuals with those of the bank, therefore supporting growth of the UK economy, the Government added.

“All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe,” the Chancellor told the House of Commons when he unveiled the Treasury’s ‘mini-budget’ on Friday.

Mr Kwarteng added that he would set out an ambitious package of regulatory reforms later in the autumn, to “reaffirm the UK’s status as the world’s financial services sector”.

Financial crash

Michael Barnett, a partner at Quillon Law and who led litigation involving high-profile banking scandals following the 2008 crisis, warned that the decision risks re-introducing a culture of greed that preceded the financial crash.

He said: “To many who were scarred by the consequences of the 2008 global financial crisis and the banking scandals that accompanied it, news that caps on bankers’ bonuses may be abolished will trigger a response bordering on visceral.

“Bankers’ bonuses were seen as emblematic of an imploding financial services industry that was fuelled by a culture based on greed and pursuit of profit at any cost.

RelatedPosts

Laurence Fox: GB News launches investigation after ‘inappropriate’ comments about Ava Evans

Braverman: Multiculturalism has ‘failed’ and threatens security

West faces existential threat if global asylum rules not tightened – Braverman

Fear of being branded ‘racist’ hindering global asylum reform, says Braverman

“Bonuses and other financial incentives formed a major component of many claims that were brought in the courts, whether successful or otherwise.”

Campaigners have pointed out that bankers’ pay-outs will soar during a time when many households are facing rising living costs and amid a swathe of strike action in efforts to raise pay.

Pouring money into the hands of “rich multinationals”

Trade union Unite’s general secretary Sharon Graham said: “This mini-budget is unashamedly a budget for the rich, big business and the City – highest earners’ tax slashed, corporation tax slashed, investment bankers’ bonuses let rip.”

Gary Smith, GMB general secretary, said: “We need to bring inflation under control and build a modern manufacturing base that creates good jobs at home and enhances our national security.

“Instead the Chancellor has chosen to pour money into the hands of rich multinationals.

“The Chancellor is tough on care workers’ pay rises and soft on bankers’ bonuses.”

Former Chancellor George Osborne was criticised by the Labour Party in 2014 for launching a legal battle to block the bankers’ bonuses that cost taxpayers tens of thousands of pounds.

At the time, Mr Osborne faced similar criticism for his timing in fighting the restrictions when many households across the UK were facing worsening living standards.

The City has long opposed the bonus cap which opponents say meddles with investment banks favoured model of lower fixed salaries and annual performance-related bonuses.

The Chancellor reiterated on Friday that the consequence of the cap was driving up bankers’ salaries so that they could qualify for bigger bonuses, as well as driving talent out of the UK to countries like the US where there are no such restrictions.

Logistics

Others have pointed out that banks will now have to work through numerous logistical considerations due to the sudden decision from the Treasury.

Phillippa O’Connor, reward and employment leader at PwC UK, said: “Removing the bankers’ bonus cap will deliver greater flexibility for UK banks in how they structure the remuneration packages of their senior staff and therefore the potential to reduce fixed costs, both of which arguably could drive competitive benefit to the UK.

“However, this flexibility will also give rise to numerous policy, legal and operational issues which firms will need to consider in detail before making any changes.

“It will not be easy for firms to unwind the increase in fixed pay which has been embedded in pay structures and policies over the last eight years.”

The Chancellor also confirmed that the bank surcharge – a charge on the profits of banks exceeding £25 million – would remain at 8 per cent.

The surcharge was previously set to fall to 3 per cent in April 2023.

Related: ‘Unashamedly for the rich’: Reaction pours in to Kwarteng’s budget

Tags: headline
Previous Post

Sturgeon: Super wealthy ‘laughing all the way to the bank’ after mini-budget

Next Post

Rachel Reeves thanks chancellor for ‘comprehensively demolishing’ his party’s record

Since you are here

Since you are here, we wanted to ask for your help.

Journalism in Britain is under threat. The government is becoming increasingly authoritarian and our media is run by a handful of billionaires, most of whom reside overseas and all of them have strong political allegiances and financial motivations.

Our mission is to hold the powerful to account. It is vital that free media is allowed to exist to expose hypocrisy, corruption, wrongdoing and abuse of power. But we can't do it without you.

If you can afford to contribute a small donation to the site it will help us to continue our work in the best interests of the public. We only ask you to donate what you can afford, with an option to cancel your subscription at any point.

To donate or subscribe to The London Economic, click here.

You can also SUBSCRIBE TO OUR NEWSLETTER .

Subscribe to our Newsletter

View our  Privacy Policy and Terms & Conditions

More from TLE

Shapps squirms after grilling from Kuenssberg-replacement, Victoria Derbyshire

Two-thirds do not trust Tories on environment after net zero announcement – poll

Laurence Fox: GB News launches investigation after ‘inappropriate’ comments about Ava Evans

Labour to add VAT to private school fees immediately if it wins power

Telegraph dubs PM’s net zero address his ‘best speech ever’

Sympathy in short supply as Farage has a wobble over debanking

Sunak convenes Cabinet as he prepares to water down net zero plans

Steve Coogan and Carol Vorderman back Lib Dem calls for electoral reform

Tourist calls police after being charged more than £500 for one dish in restaurant

Johnson off the hook after committing ‘clear and unambiguous breach’ of the rules

JOBS

FIND MORE JOBS

About Us

TheLondonEconomic.com – Open, accessible and accountable news, sport, culture and lifestyle.

Read more

SUPPORT

We do not charge or put articles behind a paywall. If you can, please show your appreciation for our free content by donating whatever you think is fair to help keep TLE growing and support real, independent, investigative journalism.

DONATE & SUPPORT

Contact

Editorial enquiries, please contact: [email protected]

Commercial enquiries, please contact: [email protected]

Address

The London Economic Newspaper Limited t/a TLE
Company number 09221879
International House,
24 Holborn Viaduct,
London EC1A 2BN,
United Kingdom

© 2019 thelondoneconomic.com - TLE, International House, 24 Holborn Viaduct, London EC1A 2BN. All Rights Reserved.




No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Sport
  • Entertainment
  • Lifestyle
  • Food
  • Travel
  • JOBS
  • More…
    • Elevenses
    • Opinion
    • Property
    • Tech & Auto
  • About Us
    • Privacy policy
  • Contact us

© 2019 thelondoneconomic.com - TLE, International House, 24 Holborn Viaduct, London EC1A 2BN. All Rights Reserved.




-->