Labour will not reinstate cap on bankers’ bonuses, vows Rachel Reeves
- Oops!Something went wrong.Please try again later.
Labour would not reinstate the cap on bankers’ bonuses despite previously criticising the move, Rachel Reeves has said, prompting claims of a “flip flop on steroids”.
The shadow chancellor said she does not have “any intention” of bringing back the limit imposed by the EU after the 2008 financial crisis to curb excessive risk-taking by City workers, as she wants to keep the industry “thriving”.
Plans to ditch the cap at twice a banker’s annual salary were first announced by Liz Truss’ chancellor, Kwasi Kwarteng, in 2022, and taken forward by his successor, Jeremy Hunt.
Mr Kwarteng said the move would encourage global banks to create jobs, invest and pay taxes in the City, warning that the bonus limit was pushing up basic salaries and driving activity outside Europe.
In October last year, as the reforms came into effect, Ms Reeves hit out at the decision on Twitter, claiming that scrapping the cap during a cost-of-living crisis “tells you everything you need to know about this Government”.
Sharing an article containing a warning from the TUC that removing the limit would fuel a “greed is good” culture, she tweeted: “Today - in the midst of their cost of living crisis - the Conservatives are scrapping the cap on bankers’ bonuses.
“It tells you everything you need to know about this Government.”
Labour approach a ‘dog food lasagne’
But she now said she would not reverse the change, as she wants to champion “a successful and thriving financial services industry”.
Andrew Griffith, the science minister, accused Ms Reeves of a “flip flop on steroids”, adding: “How would any business know where they stand under Labour? Which Rachel is going to show up, when.”
He compared Labour’s approach to financial services with a “dog food lasagne”.
He tweeted: “Whilst any U-turn to copy our reforms is welcome, Labour’s approach to the UK’s Financial Services sector is like a dog food lasagne: sort of looks the same and may even fool some people but you really wouldn’t prefer it!”
Ms Reeves, a former Bank of England economist, told the BBC: “The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances.
“But that has gone now and we don’t have any intention of bringing that back. And as chancellor of the exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK.”
Stephen Flynn, the SNP’s Westminster leader, also hit out at Labour for the change in position.
Alongside a screenshot of Ms Reeves’ tweet from last year, he wrote: “It took Labour three months to back the Tories on this.
“It tells you everything you need to know about Labour.”
