Only 15% of public support plan to axe bankers’ bonus cap

Chancellor Kwasi Kwarteng under fire over ‘obscene’ proposal to ditch limits on pay-outs

Liz Truss’s chancellor Kwasi Kwarteng (Getty Images)

Only 15 per cent of the public support the idea of ditching the cap on bankers’ bonuses introduced in the wake of the 2008 financial crisis.

Chancellor Kwasi Kwarteng has come under fire for considering a plan to axe the cap and allow bankers income to soar while millions struggle from the cost of living crisis.

Unions, MPs and economists have criticised the “obscene” proposal to end the cap introduced across the EU in 2014, which limits annual pay-outs to twice a banker’s salary.

A snap YouGov survey has found that a large majority of people are opposed to the plan. Only 15 per cent said the cap should be scrapped, while 67 per cent said it remain in place.

Only 20 per cent of the Conservatives’ voters wanted the chancellor to lift the cap on bonuses, with 65 per cent against the idea.

Labour voters are even more firmly against the move, with only 12 per cent in favour and 80 per cent saying it should not be scrapped.

Sources close to Mr Kwarteng said no final decisions on the bonuses proposal had been made, but suggested such a move as part of a wider post-Brexit overhaul of City regulations would make London a more attractive place for global banks.

Liz Truss’s chancellor has promised a growth-focused shake-up and told City bosses last week: “We need to be decisive and do things differently.”

But the TUC general secretary Frances O’Grady said Mr Kwarteng should focus on raising everyone’s wages rather than “boosting bumper bonuses for those at the top”, while Unite boss Sharon Graham said workers would be “appalled and angry”.

Gary Smith, general secretary of the GMB union, said: “Apparently frontline workers asking for a pay rise risks increasing inflation, while allowing fat cat bankers to trouser monstrous bonuses ‘attracts talent’ … It’s rank hypocrisy. There is no doubt whose side this government is on.”

City bosses have been critical of the cap introduced by EU legislation, but supporters say unfettered bonuses aided the excessive risk-taking that led to the financial crash.

Andrew Sentance, who was a member of the Bank of England’s Monetary Policy Committee during and after the financial crisis, criticised the timing of the plans – saying it would be “very bad if they did it now”.

Labour MP Margaret Hodge, who campaigns against “dirty money” in the City, said: “Thinking about bankers at this stage is obscene. Whose side is everybody on, really?”

Luke Hildyard, the executive director of the High Pay Centre think tank, said removing the cap would be an “ideological measure” that favours the rich.

Boris Johnson was forced to say he was not planning to lift the cap, as he faced a political backlash for reportedly considering the move in June. Labour leader Sir Keir Starmer accused him of plotting “pay rises for City bankers, pay cuts for district nurses”.

Mr Kwarteng is expected to announce a mini-Budget on 23 September, but it was unclear whether an announcement on bankers’ pay may come in that “fiscal event” or as part of a wider package later on.

The chancellor is expected to spell out further details of the plan to cap annual household energy bills at £2,500, as well as confirming Ms Truss’s plan to reverse the 1.25 per cent National Insurance rise, as well as ditching predecessor Rishi Sunak’s planned rise in corporation tax.

But according to The Telegraph, the Treasury will not spell out the total cost of Ms Truss’s energy plan, only giving short-term costs of possibly “a handful of months”.