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And here is some reaction to the proposal to lift the cap on bankers’ bonuses from political journalist and commentators.
From Lionel Barber, former editor of the Financial Times (aka the Bankers’ Gazette)
If you no longer have friction-free access to the EU’s single market in financial services, you will be tempted to lift the cap on bankers’ bonuses to compensate the City of London. Doesn’t feel like a game changer and at this moment, it’s politically toxic. Welcome to Brexit!
— Lionel Barber (@lionelbarber) September 15, 2022
From my colleague Pippa Crerar
Labour will be rubbing their hands with glee.
— Pippa Crerar (@PippaCrerar) September 15, 2022
From Chris Giles, economics editor at the FT
There is a legitimate argument whether a cap on bankers’ bonuses is good or bad for growth (short term and long term)….
There should be no argument that the effect is
…small*
* so long as it does not come with many more incentives to take big risks with others’ money
— Chris Giles (@ChrisGiles_) September 15, 2022
From Sky’s Beth Rigby
Fascinating @FT splash. Kwateng could scrap bankers’ bonus caps. Logic = make London more competitive, sell as Brexit benefit
But certainly not a vote winner. Bankers bonuses + no windfall tax a bold & genuine ideological break between parties I’ve not see for a decade 1/
— Beth Rigby (@BethRigby) September 15, 2022
(Rigby may have forgotten about Jeremy Corbyn.)
What’s the logic? Scrap cap intro’d via EU 2014, as part of wider deregulatory reforms. Aim = make City more attractive place for biz. That grows economy, helps Exchequer. BUT, the political risk at a time when people struggling & pub services deteriorating, HUGE political risk
— Beth Rigby (@BethRigby) September 15, 2022
As senior exec at EU firm tells @FT: “It’ll make it even harder for us to compete in London & with US banks overall” But quoted saying this too: “It is not a vote winner, I am surprised it is being talked abt” >UK long opposed cap. But Johnson didn’t move on for fear of backlash
— Beth Rigby (@BethRigby) September 15, 2022
Protecting energy companies against windfall taxes & allowing big banker bonuses. What’s the gambit? Seems to be take short term political pain now in order to boost ec growth (this Truss & Kwateng’s mantra) by time of next election. But brace for the backlash, this a huge gamble
— Beth Rigby (@BethRigby) September 15, 2022
From my colleague Peter Walker
With policies like this, and the complete ruling out of an expanded windfall tax, it’s probably fair to say the Truss government isn’t ruled by focus groups and polling. Will be interesting to see how long that lasts. https://t.co/GZUyjTUyfi
— Peter Walker (@peterwalker99) September 15, 2022
From Jon Sopel from the News Agents podcast
Remove cap on bankers’ bonuses, no new windfall tax on energy companies and tax cuts to come that will favour the most well off. Well, you can’t fault the @trussliz government for boldness. But fairness? https://t.co/jxwOo1bQt2
— Jon Sopel (@jonsopel) September 14, 2022
TUC says Kwarteng should prioritise higher wages for everyone, not boosting bonuses for bankers
The TUC has said the government should be focusing on pay rises for everyone, not increasing bankers’ bonuses. In a statement, Frances O’Grady, its outgoing general secretary, said:
Bonuses in the City are already at a record high.
While City executives rake it in, millions are struggling to keep their heads above water.
Working people are being walloped by soaring prices after the longest and harshest wage squeeze in modern history.
The chancellor’s number one priority should be getting wages rising for everyone – not boosting bumper bonuses for those at the top.
To get pay rising across the economy, the chancellor must deliver a plan for a £15 minimum wage, fund decent pay rises for all public sector workers and introduce fair pay agreements for whole industries.
Liz Truss faces backlash over plan to lift cap on bankers’ bonuses
Good morning. Politics has been on hold this week not just because the government and opposition parties have suspended almost all announcements but because to a large extent they are not even commenting on political matters at all, out of respect for the period of mourning for the Queen. But from the Treasury, where officials are working hard on next week’s emergency budget, and cobbling together a mechanism for implementing the energy price guarantee, some news does seem to be seeping out. Earlier this week we learned that Kwasi Kwarteng, the new chancellor, has told officials to focus “entirely on growth”. And today the Financial Times reveals that he wants to lift the cap on bankers’ bonuses.
My colleague Kalyeena Makortoff has coverage of this on the business live blog.
The idea has already triggered a backlash. Andrew Sentance, who was a member of the Bank of England’s monetary policy committee during the financial crash, told the Today programme this morning. He said:
I think it sends a rather confused signal when people are being squeezed in terms of the cost of living and the government’s trying to encourage pay restraint in the public sector. So to appear to allow bankers to have bigger bonuses at the same time doesn’t look very well timed.
There may be some longer term arguments for pursuing this policy, but I think the timing would be very bad if they did it now.
And in a Twitter thread starting here, Mick McAteer, a former board member at the Financial Conduct Authority, says this is a “bad idea” that will encourage aggressive risk taking.
Interesting discussion on @BBCr4today about gov scrapping bankers bonus cap.
There’s a number of reasons why this is a bad idea.
Will encourage the type of aggressive, risk taking socially useless market behaviours we really dont need. 1/— Mick McAteer (@MickMcAteer) September 15, 2022
The cap on bankers’ bonuses was introduced as an EU rule after the bonus culture in banking was seen as contributing to the risk taking that triggered the financial crash. George Osborne and the Tory chancellors who followed him never liked it on principle, but after Brexit they shied away from pledging to get rid of it because they realised that, regardless of the economic arguments, the politics of such a move would be terrible.
But Liz Truss is a more ideological prime minister than any of her immediate predecessors. Kevin Schofield from HuffPost UK thinks populism may now be out of the window.
I try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest, I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.
If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.
Alternatively, you can email me at andrew.sparrow@theguardian.com
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