Kwarteng priority should be getting wages rising not bonuses, O’Grady says

Frances O’Grady has declared that Kwasi Kwarteng’s “number one priority” should be getting wages rising not boosting bonuses after it was reported that the Chancellor is considering removing a cap on bankers’ bonuses.

According to the Financial Times, Kwarteng is planning to scrap the cap on bonuses, introduced following the 2008 financial crash, in an attempt to increase the competitiveness of the City of London and attract more talent to the City.

Commenting on the reports, the TUC 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. That’s how you boost pay packets in every corner of the country.”

The cap on bonuses – which prevents banks from paying employees bonuses more than twice their salary – was introduced by EU legislation in 2014. Kwarteng reportedly argues that axing the cap would be a signal of his new “Big Bang 2.0” approach to post-Brexit City regulation.

Sharon Graham tweeted: “Workers will be appalled and angry at these plans. When millions are struggling to feed their families and keep the lights on, the [government’s] priority appears to be boosting the telephone number salaries of their friends in the city.”

The Unite general secretary declared: “Britain’s economy is now dominated by rampant profiteering. Removing the cap on bankers’ bonuses will make that worse. Last year, Britain’s banks made £45.6bn of profits.”

“The Chancellor’s signal to the city is ‘let it rip’ further and further, while the Bank of England lectures workers about pay restraint. You could not make it up,” she added.

Executive director of the High Pay Centre thinktank Luke Hildyard said: “The bonus cap has probably helped to contain bankers’ pay awards, but they’ve still reached record highs this year while the rest of the country has undergone an epic cost-of-living crisis and profound economic hardship.

“We know that bonuses in the financial services sector have helped the richest 1% of the population to capture an increasing share of total UK incomes.

“Removing the cap would be a pro-rich ideological measure that sends a depressing message about who policymakers listen to and think about when making economic policy.”

It was previously reported in June that the government was considering removing the cap on bonuses. Commenting at the time, Labour leader Keir Starmer said the move would mean “pay rises for city bankers, pay cuts for district nurses”.

Analysis by the TUC published in July found that average real wages in the UK are set to plummet by £1,750 between 2022 and 2023. Commenting on the research, Frances O’Grady argued that the Conservatives have “consigned Britain to the bottom of the league for pay growth”.

The trade union federation has set out a plan to deliver a national £15 minimum wage and has urged the government to work with the Low Pay Commission to deliver its recommendations “as soon as possible”.

In an interview with LabourList earlier this month, O’Grady said: “It’s clear Britain’s broken, and it’s been broken for some time now.

“When you see more and more children being pushed into poverty and most poor children having at least one parent in a job, often two or three jobs, and yet still, that family’s below the breadline, something has gone really wrong.

“When you see decent men and women – posties, gas engineers, teachers, healthcare workers – really, really struggling. When our NHS depends on huge amounts of unpaid overtime just to keep going.

“Something has gone badly wrong. It’s still the case that there is too much power and wealth in the hands of too few, and ordinary people are being mugged.”