Policies which please the City are unlikely to be the ones which solve the UK’s economic ails
This week the UK’s financial services regulator the Financial Conduct Authority announced that the cap on bankers’ bonuses would be removed from October 31st.
This change was first announced last autumn by then Chancellor of the Exchequer Kwasi Kwarteng in the now infamous mini-budget.
While the current Chancellor of the Exchequer Jeremy Hunt is now distancing himself from the decision, attributing responsibility to the regulator, nonetheless much of the reaction has focused on why the government is helping out bankers rather than those struggling with the cost of living crisis.
In truth, the introduction of the cap on bonuses did little to lower pay among top bankers, with base pay increasing to make up for lower incentive-based pay. But the logic promoted by the regulator that scrapping the cap is needed to increase the competitiveness of the UK financial services industry and that wellbeing of said industry is vital to tacking UK’s economic ails is one we take issue with.
As our Director Luke Hildyard said in a comment in response to this change, which has been quoted in multiple national media outlets including the I, the Independent, the Mirror and Sky News.
“The UK already has more millionaire bankers than the whole of the EU put together yet our economy is stagnant and our public services are in crisis. Whether or not the bonus cap was an effective policy measure, we can’t rely on the outsized incomes of a handful of super-rich bankers trickling down to lift slumping living standards for the wider population. The solutions to the UK’s malaise have to involve braver action to win low and middle income workers a fairer share of the wealth that their labour creates.”
Luke discussed the matter further on BBC Radio 4’s PM show, with the clip below taken from that interview.