The Trades Union Congress has accused the Tory government of promoting a “greed is good” culture among bankers, who it said would be able to “cash in on unlimited bonuses” after a cap on payouts was lifted on Tuesday.
The TUC said that while ministers had repeatedly called for pay restraint for most workers, they had been “silent over excess in the City”.
The banker bonus cap was introduced in 2014 to curb risk-taking in the wake of the global financial crisis. Efforts to remove it were first taken by Liz Truss’s short-lived government in September 2022 to boost investment in the City and scrap EU rules after Brexit.
The proposals were later supported by Rishi Sunak’s government when he took office last October. The Bank of England and Financial Conduct Authority (FCA) formally announced the decision to lift the cap last week, and confirmed the changes would come into force on 31 October.
The cap had originally limited bonuses to two times bankers’ salaries, giving the average City worker an opportunity to pocket as much as £120,000 in extra payouts, the TUC said.
That is equivalent to about seven times the average pay of a care worker, who earns about £17,780, and almost four times the salary of a median earner, who is paid about £32,400. The figure was much higher for banking executives earnings salaries of about £250,000, who – even under the cap – could take home bonus payments of up to £500,000.
The TUC general secretary, Paul Nowak, said: “The Conservatives are presiding over the worst cost of living nightmare in generations. But as millions struggle to cover the basics, executive bankers are now being given unlimited bonuses. City financiers are already raking it in. They don’t need another leg-up from the Tories.
“The bonus cap was introduced to curb reckless profiteering after bankers crashed the economy. But Rishi Sunak seems perfectly happy with fuelling a ‘greed is good’ culture in the City.
“He’s following in the footsteps of his predecessor Liz Truss – feathering the nests of the wealthiest while turning his back on working people.”
A Treasury spokesperson said decisions on banker pay were a matter for the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA). The PRA declined to comment.
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A spokesperson for the industry lobby group, UK Finance, said: “The removal of the bonus cap means firms subject to it will be able to vary the structure of remuneration.
“A bonus cap is not used in other leading international financial centres outside the EU and, as the PRA and FCA noted, it has been identified as a factor in limiting labour mobility. We support its removal, which helps ensure the financial services industry is globally competitive and makes the UK a more attractive place to work for international professionals.”
The FCA declined to comment.