The Former Director General of the CBI has hit out at Kwasi Kwarteng’s decision to scrap the cap on banker bonuses.
Lord Digby Jones said the move amounted to “lousy politics”.
Speaking to Alastair Stewart on GB News, he said: “It just doesn’t play well. The upside is that it does attract more talent into the financial services industry.
“But the optics of this are awful. I’ve believed all my life in what I would call socially inclusive wealth creation. That business is this agent in our society that creates wealth that generates jobs, that generates profits from which you pay tax, either by employing people who pay tax, or paying it yourself.
“I believe passionately that you’re entitled to a profit, but not where you haven’t earned it and where all you’ve done is sit there and it’s fallen in your lap.
It’s lousy politics from the Tories. And I don’t believe at this moment in time it was the right moment to do it.”
It was announced on Friday that Britain will scrap the cap on banker bonuses.
Instead, the Government is pledging an ambitious deregulation of London’s financial industry to boost growth.
But the move has sparked fury from critics for helping the rich in an economic downturn.
The cap limits bonuses to twice a banker’s basic salary, with shareholder approval, and was introduced in the European Union to curb excessive risk taking after taxpayers had to bail out lenders in the global financial crisis.
Britain and the Bank of England have always opposed the cap, introduced in 2014, saying it simply bumps up basic pay, and both new Prime Minister Liz Truss and Kwasi Kwarteng had said they intended to scrap it as part of a deregulation drive following Britain’s withdrawal from the EU.
“We need global banks to create jobs here, invest here and pay taxes here in London, not in Paris, not in Frankfurt and not in New York,” Kwarteng told Parliament.
“All the bonus cap did was to push up the basic salary to bankers or drive activity outside Europe, it never capped total remunerations… As a consequence of this … we are going to get rid of it.”
