Bankers’ Bonuses

Treasury – in the House of Commons on 11th October 2022.

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Photo of Marsha de Cordova Marsha de Cordova Labour, Battersea

What assessment he has made of the potential effect of removing the cap on banker’s bonuses on the distribution of wealth.

Photo of Andrew Griffith Andrew Griffith The Financial Secretary to the Treasury

Reforming the EU’s directive on the bonus cap is not about paying people more. All it ever did was increase base pay, regardless of performance. It was never a cap on total remuneration, and no one should pretend that it was.

Photo of Marsha de Cordova Marsha de Cordova Labour, Battersea

That was total nonsense. As some families in Battersea struggle to keep up with the rising cost of living, the Government have chosen to help bankers by removing the cap on their bonuses, while maintaining the cap on household social security. Despite soaring bills and growing inflation, the cap has remained stagnant since 2016, plunging hundreds of thousands of families into deep poverty. The cap on social security is cruel. How can the Chancellor seriously justify removing the cap on bankers’ bonuses but not the social security cap? Will the Minister have a word with his colleagues at the Department for Work and Pensions and change that?

Photo of Andrew Griffith Andrew Griffith The Financial Secretary to the Treasury

The hon. Lady has fully booked her place as a member of the anti-growth coalition. The Government are not afraid to be on the side of the people who create the wealth that funds our public services. In 1979 the top 1% of earners paid about 10% of income tax; they now pay 29.1%. That is three times as much.

Photo of Andrew Bridgen Andrew Bridgen Conservative, North West Leicestershire

Does my hon. Friend agree that scrapping the cap on bankers’ bonuses will increase not only competitiveness, but tax receipts?

Photo of Tulip Siddiq Tulip Siddiq Shadow Minister (Treasury)

At a time when my constituents are struggling to make ends meet, struggling to put food on the table and struggling to put the heating on, the Government have decided that the way to increase growth in the economy is to lift the cap on bankers’ bonuses. Not a single person or a single bank that I spoke to in the City as shadow City Minister said that this was the right policy to drive growth in the economy. Does the Minister really think that the policy will drive growth in the economy, or will we see yet another U-turn from his Government?

Photo of Andrew Griffith Andrew Griffith The Financial Secretary to the Treasury

I can assure the hon. Lady that this Government are going to grow the economy. We will grow the economy by releasing the burden, or the yoke, of taxation, whether that is on ordinary people by cutting the basic rate of tax from 20p to 19p, or by today reversing the increase in national insurance, or by cutting the taxes on the businesses that she has been meeting—I welcome that—by reversing the increase in corporation tax next year.