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Banker’s bonuses: another Labour betrayal

We are lurching backwards politically now that both major parties are united in servicing the City before all else, writes BERNIE EVANS

WITH plans to “unashamedly champion Britain’s financial services sector,” cut down on “10,000 pages of regulation,” and impose no windfall taxes on banks despite their record profits, it came as little surprise that a Labour government will not reinstate the cap on bankers’ bonuses.

In July last year, for example, Natwest announced half-year profits of £3.58 billion, up from £2.6bn the previous year.

Imagine how much they and the other profiteering banks will be paying in bonuses to people who will have contributed nothing towards the higher profits, which were simply made by the exploitation of British customers, delaying an increase in savings rates after raising them for borrowers immediately after the Bank of England announced hikes in the base rates.

Caps on bankers’ bonuses were originally introduced by the EU in 2014, in a move designed to prevent excessive risk-taking leading to financial crises, like the one in 2008.

The caps limited bonuses to two times bankers’ salaries, giving the average City worker the chance to take home an extra £120,000, but even so, in many cases the bonuses were obviously much higher.

Then in 2022, then chancellor, Kwasi Kwarteng, and PM Liz Truss, announced the cap would be lifted, much to the annoyance of the Labour leaders — then.

In 2022, they were united in their fury. The shadow chief secretary to the Treasury, Darren Jones, on the lifting of the cap, said that it “tells us everything we need to know about the priorities of this out of touch government,” a speech echoed by Reeves herself.

Jonathan Reynolds, the shadow business secretary, said that getting rid of the bonus cap, “when it will not have any impact on 99.9 per cent of people in this country” is “incoherent,” and “not the way to grow this economy for the benefit of everyone.”

But isn’t “growing the economy” the keystone policy of this New Labour tribute act? And the hypocrisy gets worse.

The Tories were accused by Labour bigwigs of being hypocritical, for focusing attention on making wealthy City workers obscenely rich, while ignoring the needs of ordinary people at a time of high inflation.

Now they have done exactly the same themselves. It’s not just hypocritical of Labour, it’s downright silly.

Historically, when Blair, Brown and co were busy deregulating the financial sector and encouraging a “greed is good” culture in the City, bankers took unnecessary risks. The result was a massive crash, and the government had to step in with taxpayers’ billions to rescue banks.

The previously mentioned Natwest owes its very existence to a £46bn bailout. The cost gave the excuse the duplicitous Cameron and Osborne needed to install their regime of totally unnecessary austerity.

Not reinstating the cap is also a bad move electorally speaking. Labour is the party supposedly so keen on bringing trust back into politics, but Keir Starmer’s leadership has seen nothing more than U-turn after U-turn, from the 10 pledges to bankers’ bonuses.

What sort of message is this sending out to voters about whose side politicians are on? The Westminster bubble may not know it, but there is still a cost-of-living crisis going on, prices are still rising, public services are still struggling, public-sector workers are still underpaid and leaving either their professions or country in droves, councils are going bankrupt — but Labour is concentrating its efforts on wooing banks and big business — again.

Morally, how can it be right to allow obscene amounts of money to be paid to already overpaid workers with money denied to banks’ customers because of deliberately delayed interest rate increases?

There aren’t even any Labour plans to tax the wealthy more, even though the richest 1 per cent in Britain own 36.5 per cent of all financial assets with a value of £1.8 trillion, and most of the CEOs of the top companies earn in excess of a hundred times the amount earned by their average employees.

The country clearly is in an emergency situation, NHS queues are lengthening, junior doctors are emigrating, trainee teacher numbers are declining, schools are crumbling (some literally), the care sector is struggling, and a Labour government must have more revenue to stop the rot.

Even during the majority of Thatcher’s premiership, the top rate of income tax was 15 per cent higher than today’s rate, and it was deemed unfair by her long-serving chancellor, Nigel Lawson, for unearned income to be taxed at a lower rate than earned income. But Starmer and Reeves clearly don’t see it that way.

Are voters going to be treated as mugs by Labour as well as by the Tories? Are we expected to believe bankers’ ill-gotten gains will somehow trickle down and “grow” the economy, benefiting us all in the long run?

Are we really expected, moreover, to vote for a party that puts the needs of business before those of ordinary people, the increase in inequality before its reduction, and prioritises wealth in the City before the restoration of our public services?

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