Shadow chancellor Rachel Reeves has insisted stronger rules are in place to prevent risky behaviour in the City as she defended her decision to allow unlimited bonuses for bankers.
Labour’s holder of the purse strings said on Thursday she had heard the calls from company bosses to end the “chopping and changing” seen under the Government.
She has faced some criticism for ruling out bringing back the cap on bonuses introduced in the wake of the 2008 financial crash after it was axed by the Conservatives.
Ms Reeves upped Labour’s “pro-business” pitch during a speech to company bosses by committing not to hike corporation tax during a first term in power.
“The truth is that in financial services there are a lot more rules and regulations and safeguards in place than there were before the financial crisis, for example banks have to put aside much more capital than they did before 2008,” she replied to reporters.
“And there are much stronger rules about clawing back bankers’ bonuses. So we didn’t think it was the right priority, it wouldn’t have been my number one priority in that budget.
“But the chopping and changing has got to end if we’re going to give stability to business and that’s why we will not be bringing that back.”
The appeal to the party’s business conference in London marked another shift from Jeremy Corbyn’s leadership, with him having labelled the financial sector “speculators and gamblers who crashed our economy”.
The cap limited annual payouts to twice a banker’s salary.
But it was scrapped last year after a decision was made in Liz Truss’s brief spell in No 10 by her chancellor Kwasi Kwarteng.
Speaking to ITV News, Ms Reeves was pressed on whether she was comfortable with the idea of a banker being able to earn more than £2 million in bonuses.
“Of course, if they got that bonus, they would also be paying income tax on that bonus. If it was a £2 million bonus that’s £800,000, £900,000. So that would obviously be important revenues,” she said.
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