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Liz Truss faces backlash over plan to lift cap on bankers’ bonuses – UK politics live | Politics


Liz Truss faces backlash over plan to carry cap on bankers’ bonuses

Good morning. Politics has been on maintain this week not simply because the federal government and opposition events have suspended virtually all bulletins however as a result of to a big extent they don’t seem to be even commenting on political issues in any respect, out of respect for the interval of mourning for the Queen. However from the Treasury, the place officers are working onerous on subsequent week’s emergency funds, and cobbling collectively a mechanism for implementing the vitality value assure, some information does appear to be seeping out. Earlier this week we realized that Kwasi Kwarteng, the brand new chancellor, has instructed officers to focus “totally on development”. And in the present day the Monetary Occasions reveals that he desires to carry the cap on bankers’ bonuses.

My colleague Kalyeena Makortoff has protection of this on the enterprise dwell weblog.

The thought has already triggered a backlash. Andrew Sentance, who was a member of the Financial institution of England’s financial coverage committee through the monetary crash, instructed the In the present day programme this morning. He mentioned:

I feel it sends a slightly confused sign when persons are being squeezed by way of the price of dwelling and the federal government’s making an attempt to encourage pay restraint within the public sector. So to seem to permit bankers to have greater bonuses on the identical time doesn’t look very effectively timed.

There could also be some long term arguments for pursuing this coverage, however I feel the timing could be very unhealthy in the event that they did it now.

And in a Twitter thread beginning right here, Mick McAteer, a former board member on the Monetary Conduct Authority, says it is a “unhealthy concept” that can encourage aggressive danger taking.

Attention-grabbing dialogue on @BBCr4today about gov scrapping bankers bonus cap.
There’s quite a few explanation why it is a unhealthy concept.
Will encourage the kind of aggressive, danger taking socially ineffective market behaviours we actually dont want. 1/

— Mick McAteer (@MickMcAteer) September 15, 2022

The cap on bankers’ bonuses was launched as an EU rule after the bonus tradition in banking was seen as contributing to the danger taking that triggered the monetary crash. George Osborne and the Tory chancellors who adopted him by no means preferred it on precept, however after Brexit they shied away from pledging to eliminate it as a result of they realised that, whatever the financial arguments, the politics of such a transfer could be horrible.

However Liz Truss is a extra ideological prime minister than any of her fast predecessors. Kevin Schofield from HuffPost UK thinks populism might now be out of the window.

I attempt to monitor the feedback under the road (BTL) however it’s unattainable to learn all of them. If in case you have a direct query, do embrace “Andrew” in it someplace and I’m extra prone to discover it. I do attempt to reply questions, and if they’re of basic curiosity, I’ll submit the query and reply above the road (ATL), though I can’t promise to do that for everybody.

If you wish to appeal to my consideration rapidly, it’s in all probability higher to make use of Twitter. I’m on @AndrewSparrow.

Alternatively, you’ll be able to electronic mail me at andrew.sparrow@theguardian.com

Key occasions

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Downing Avenue has confirmed that Liz Truss will maintain conferences on the weekend with a small variety of the world leaders attending the funeral of the Queen on Monday. They’re prone to happen at No 10 and at Chevening, the grace and favour residence utilized by Truss when she was overseas secretary. As prime minister, she now has the usage of Chequers, however it’s not accessible due to routine upkeep work going down.

These talks should not being described as formal bilateral conferences. No 10 just isn’t anticipated to launch readouts afterwards and No 10 mentioned a lot of the dialogue would in all probability contain reflecting on the Queen.

MPs and friends below sanctions from Beijing protest about Chinese language authorities being invited to Queen’s funeral

A gaggle of MPs and friends below sanctions from China have expressed severe considerations in regards to the Chinese language authorities being invited to the Queen’s funeral, PA Media stories. Senior Tory MPs Tim Loughton and Sir Iain Duncan Smith wrote this week to the Commons Speaker calling it “extraordinary” that Chinese language representatives ought to have obtained an invite. The letter, additionally signed by the crossbench peer Lord Alton and Labour peer Girl Kennedy, says:

We’re tremendously involved to listen to that the federal government of China has been invited to attend the state funeral subsequent week, regardless of different nations Russia, Belarus and Myanmar being excluded.

On condition that the UK parliament has voted to recognise the genocide dedicated by the Chinese language authorities in opposition to the Uyghur individuals it’s extraordinary that the architects of that genocide must be handled in any extra beneficial approach than these nations who’ve been barred.

The Chinese language authorities is contemplating sending a delegation to the funeral on Monday in Westminster Abbey however President Xi Jinping just isn’t anticipated to attend.

Within the letter, the parliamentarians additionally categorical concern that Chinese language officers might be admitted to the Palace of Westminster on the day of the funeral. They are saying:

It’s also notably inappropriate on condition that seven parliamentarians together with ourselves stay sanctioned by the Chinese language authorities and also you together with the Lord Speaker have fairly rightly barred the Chinese language ambassador from attending the Palace of Westminster while these unjustified sanctions stay in place.

It could be as a part of the preparations for overseas dignitaries attending the state funeral that services on the Palace of Westminster shall be made accessible to them earlier than or after attending the service at Westminster Abbey.

I’m positive you’ll agree that it could be wholly inappropriate that any consultant of the Chinese language authorities ought to be capable to come to the Palace of Westminster and that you may give us your assurance that this won’t occur.

The conference view at Westminster is that, whatever the financial case for lifting the cap on bankers’ bonuses, politically it’s a big danger. However in his Inside Politics briefing for the Monetary Occasions, Stephen Bush says he isn’t positive. Right here’s an extract:

I’m additionally not satisfied the political consensus is correct on this one. Sure, something that may be spun or described as growing the quantity that bankers earn (although the restriction on bonuses just isn’t so simple as that, in any case) brings again to the fore all these perceptions voters have about how the Conservatives are the social gathering of the wealthy. However it additionally brings again anxieties that Labour is a celebration of upper taxes for primarily all people, and that Labour’s definition of “the wealthy” consists of virtually all people …

Finally, the largest political drawback for the Conservatives isn’t whether or not they’re seen because the social gathering of the wealthy — a ship that has not simply sailed, reached the brand new world, worn out a lot of the indigenous inhabitants and established a world superpower — it’s that the UK public realm is in a horrible state.

Thousands and thousands face both lengthy waits for healthcare or must pay out of pocket for personal options. Outdoors of homicide and rushing, most crimes go unpunished. Colleges face big staffing and price pressures. It’s extra essential, frankly, that Truss and Kwarteng discover the additional revenues and the mandatory reforms to repair public companies than any of the home political rows they could must have about bankers’ bonuses or every other route they take to extend development and subsequently tax income.

In keeping with a narrative by Oliver Wright within the Occasions, subsequent week’s emergency “funds” is now anticipated on Friday. Wright says:

On Thursday the brand new well being secretary, Thérèse Coffey, is anticipated to make an announcement on the NHS after which, most probably on Friday, the brand new chancellor Kwasi Kwarteng will unveil what the federal government describes as a “fiscal occasion”, which is prone to embrace plans to reverse April’s nationwide insurance coverage rise and freeze company tax.

Parliament had not been on account of sit that day because it was supposed to interrupt up on Thursday evening for the social gathering convention recess. Nevertheless, it’s now prone to sit on Friday to find time for Kwarteng’s assertion. MPs are additionally anticipated to return earlier to Westminster than had beforehand been deliberate.

UK to unilaterally proceed suspending Northern Eire border checks

In its response to the authorized proceedings launched by the EU over the Northern Eire protocol (see 11.54am), the UK authorities has mentioned that it has unilaterally determined to proceed suspending border checks on farm produce and different items coming into NI from Nice Britain, my colleague Lisa O’Carroll stories.

EU receives UK’s response to authorized proceedings over failure to adjust to Northern Eire protocol

The European Union is contemplating its subsequent steps after receiving the UK’s response to authorized threats over the failure to adjust to the post-Brexit Northern Eire protocol, PA Media stories. PA says:

Regardless of politics as regular being paused whereas the nation mourns the Queen’s demise, the federal government responded to the motion forward of in the present day’s deadline.

The bloc had requested a response to its raft of infringement proceedings over the UK’s failure to adjust to the foundations earlier than the top of the day.

European Fee spokesman Daniel Ferrie mentioned: “I can verify we now have obtained a reply from the UK. We are going to now analyse the reply earlier than deciding on the subsequent steps.”

What the UK’s response contained was unclear, however the authorities was anticipated to set out the way it believes that no operational adjustments on how the protocol works are required.

European Fee president Ursula von der Leyen shall be in Westminster for the Queen’s funeral on Monday.

It’s unclear if she shall be assembly Liz Truss whereas in London, though Truss is anticipated to carry some talks with political leaders throughout their visits.

Sir Philip Augar, a former banker and the creator of a number of books on the Metropolis, instructed the In the present day programme this morning that, from a messaging viewpoint, eliminating the cap on bankers’ bonuses was “completely horrible”. He defined:

Few of us would disagree with the concept that bankers receives a commission an excessive amount of. They obtained paid an excessive amount of in my day after I labored within the business, and that’s much more true now.

However he mentioned that Kwasi Kwarteng, the chancellor, was proper to suppose that the cap on bonuses was flawed. He went on:

Counter intuitively, the bonus cap hasn’t helped in any respect. In actual fact, it’s made issues worse as a result of banks have merely obtained around the cap by growing salaries, and meaning they’re locked into a really excessive whole compensation package deal. Bankers have accomplished even higher.

So, though instinctively it feels improper, I can perceive the chancellor’s viewpoint if that is what they do.

He additionally mentioned he agreed that lifting the cap may make the Metropolis extra aggressive.

Notably on the funding banking facet – that’s the buying and selling and markets enterprise – it’s a globally aggressive business. Pay charges are set, not in London or in Europe, however in New York, and I can perceive the concept that you may need to make London extra aggressive by liberating up the cap.

Philip Aldrick, an economics reporter at Bloomberg, makes the same argument on Twitter, declaring that Mark Carney, the previous governor of the Financial institution of England, was against the cap.

On scrapping the banker bonus cap. Carney and the BOE thought it was unhealthy for monetary stability because it mounted wage prices after years spent designing maluses and clawbacks to enhance incentives. Cameron’s 2016 negotiation for brand new EU member phrases would have seen the cap scrapped.

— Philip Aldrick (@PhilAldrick) September 15, 2022

A portion of bonuses have been speculated to be paid over time in inventory and might be cancelled later. Banks created “allowances” to get around the cap. However the issue is salaries have now shot up. The outdated variable construction – decrease mounted pay, greater bonus potential -needs to return

— Philip Aldrick (@PhilAldrick) September 15, 2022

This is Carney in 2014 on how greatest to deal with banker compensation for monetary stability outcomes. The BOE spent ages calibrating a plan to ensure incentives have been improved. Then EU imposed the crude bonus cap, and base pay soared, making the cautious plans largely redundant pic.twitter.com/r8UfBE9BZM

— Philip Aldrick (@PhilAldrick) September 15, 2022

Patrick Hennessy, a former Labour spin physician, has posted this on Twitter in response to the FT story about Thérèse Coffey.

Julian Jessop, economics fellow on the Institute of Financial Affairs, a free market thinktank which is extremely regarded by Liz Truss, says lifting the cap on bankers’ bonuses would ship a “optimistic sign” to the Metropolis.

“Kwarteng seeks to scrap bankers’ bonus cap to spice up Metropolis of London”…👍

I do not suppose the cap has a big impact, however eliminating it could ship one other optimistic sign.

ps. the “pay rises for bankers, pay cuts for nurses” narrative is lazy… (1/2)https://t.co/JeudEJPmOr

— Julian Jessop (@julianHjessop) September 15, 2022

… permitting industrial #banks to pay a few of their workers extra may have no influence on public sector pay, besides maybe a optimistic one (extra tax revenues).

There are additionally significantly better methods to discourage extreme risk-taking within the #City, incl. long-term incentive schemes.

(2/2)

— Julian Jessop (@julianHjessop) September 15, 2022

Thérèse Coffey, the brand new well being secretary and deputy prime minister, has angered some NHS workers “by telling them to ‘be optimistic’ and keep away from utilizing coverage wonk ‘jargon’ as they grapple with job cuts and the deepening value of dwelling disaster”, the Monetary Occasions stories. Coffey issued her directions in an electronic mail setting out her communication preferences. It even talked about her dislike of the Oxford comma.

Of their story Donato Paolo Mancini, Sarah Neville and Jasmine Cameron-Chileshe report:

Insiders mentioned that the directions — entitled “New secretary of state methods of working preferences” — had been printed on the Division of Well being and Social Care’s intranet. An electronic mail, seen by the Monetary Occasions, exhibits Coffey’s steering was additionally forwarded to UK Well being Safety Company workers.

The rubric has angered well being staff, a lot of whom have been on the entrance traces through the Covid pandemic and who now face real-terms pay cuts and added pressures as an infection charges are anticipated to rise over the winter.

Coffey’s workplace requested staff to “be exact” and “be optimistic — if we now have accomplished one thing good, allow us to say so and keep away from double negatives”.

The e-mail was “tremendous patronising . . . It does make you contemplate for those who’re in the precise place when a brand new minister is available in with this,” mentioned one individual with data of the temper at UKHSA ….

One other senior public well being official mentioned they understood that workers would see the reference to Oxford commas, particularly, as “extraordinarily patronising”.

Thérèse Coffey.
Thérèse Coffey. {Photograph}: Maja Smiejkowska/Reuters

Lifting cap on bankers’ bonuses could be ‘pro-rich ideological measure’ sending ‘miserable message’, says thinktank

Luke Hildyard, government director of the Excessive Pay Centre thinktank, says eradicating the cap on bankers’ bonuses could be an “ideological measure” that favours the wealthy. He says:

The bonus cap has in all probability helped to comprise bankers’ pay awards however they’ve nonetheless reached report highs this 12 months whereas the remainder of the nation has undergone an epic cost-of-living disaster and profound financial hardship.

We all know that bonuses within the monetary companies sector have helped the richest 1% of the inhabitants to seize an growing share of whole UK incomes.

Eradicating the cap could be a pro-rich ideological measure that sends a miserable message about who policymakers hearken to and take into consideration when making financial coverage.

And right here is a few response to the proposal to carry the cap on bankers’ bonuses from political journalist and commentators.

From Lionel Barber, former editor of the Monetary Occasions (aka the Bankers’ Gazette)

For those who now not have friction-free entry to the EU’s single market in monetary companies, you’ll be tempted to carry the cap on bankers’ bonuses to compensate the Metropolis of London. Doesn’t really feel like a recreation changer and at this second, it’s politically poisonous. Welcome to Brexit!

— Lionel Barber (@lionelbarber) September 15, 2022

From my colleague Pippa Crerar

Labour shall be rubbing their arms with glee.

— Pippa Crerar (@PippaCrerar) September 15, 2022

From Chris Giles, economics editor on the FT

There’s a respectable argument whether or not a cap on bankers’ bonuses is sweet or unhealthy for development (brief time period and long run)….

There must be no argument that the impact is

…small*

* as long as it doesn’t include many extra incentives to take large dangers with others’ cash

— Chris Giles (@ChrisGiles_) September 15, 2022

From Sky’s Beth Rigby

Fascinating @FT splash. Kwateng might scrap bankers’ bonus caps. Logic = make London extra aggressive, promote as Brexit profit

However actually not a vote winner. Bankers bonuses + no windfall tax a daring & real ideological break between events I’ve not see for a decade 1/

— Beth Rigby (@BethRigby) September 15, 2022

(Rigby might have forgotten about Jeremy Corbyn.)

What’s the logic? Scrap cap intro’d by way of EU 2014, as a part of wider deregulatory reforms. Goal = make Metropolis extra enticing place for biz. That grows economic system, helps Exchequer. BUT, the political danger at a time when individuals struggling & pub companies deteriorating, HUGE political danger

— Beth Rigby (@BethRigby) September 15, 2022

As senior exec at EU agency tells @FT: “It’ll make it even tougher for us to compete in London & with US banks general” However quoted saying this too: “It’s not a vote winner, I’m stunned it’s being talked abt” >UK lengthy opposed cap. However Johnson didn’t transfer on for concern of backlash

— Beth Rigby (@BethRigby) September 15, 2022

Defending vitality firms in opposition to windfall taxes & permitting large banker bonuses. What’s the gambit? Appears to be take brief time period political ache now with the intention to enhance ec development (this Truss & Kwateng’s mantra) by time of subsequent election. However brace for the backlash, this an enormous gamble

— Beth Rigby (@BethRigby) September 15, 2022

From my colleague Peter Walker

With insurance policies like this, and the whole ruling out of an expanded windfall tax, it’s in all probability truthful to say the Truss authorities isn’t dominated by focus teams and polling. Can be attention-grabbing to see how lengthy that lasts. https://t.co/GZUyjTUyfi

— Peter Walker (@peterwalker99) September 15, 2022

From Jon Sopel from the Information Brokers podcast

Take away cap on bankers’ bonuses, no new windfall tax on vitality firms and tax cuts to return that can favour probably the most effectively off. Nicely, you’ll be able to’t fault the @trussliz authorities for boldness. However equity? https://t.co/jxwOo1bQt2

— Jon Sopel (@jonsopel) September 14, 2022

TUC says Kwarteng ought to prioritise greater wages for everybody, not boosting bonuses for bankers

The TUC has mentioned the federal government must be specializing in pay rises for everybody, not growing bankers’ bonuses. In an announcement, Frances O’Grady, its outgoing basic secretary, mentioned:

Bonuses within the Metropolis are already at a report excessive.

Whereas Metropolis executives rake it in, hundreds of thousands are struggling to maintain their heads above water.

Working persons are being walloped by hovering costs after the longest and harshest wage squeeze in trendy historical past.

The chancellor’s primary precedence must be getting wages rising for everybody – not boosting bumper bonuses for these on the prime.

To get pay rising throughout the economic system, the chancellor should ship a plan for a £15 minimal wage, fund first rate pay rises for all public sector staff and introduce truthful pay agreements for entire industries.

Liz Truss faces backlash over plan to carry cap on bankers’ bonuses

Good morning. Politics has been on maintain this week not simply because the federal government and opposition events have suspended virtually all bulletins however as a result of to a big extent they don’t seem to be even commenting on political issues in any respect, out of respect for the interval of mourning for the Queen. However from the Treasury, the place officers are working onerous on subsequent week’s emergency funds, and cobbling collectively a mechanism for implementing the vitality value assure, some information does appear to be seeping out. Earlier this week we realized that Kwasi Kwarteng, the brand new chancellor, has instructed officers to focus “totally on development”. And in the present day the Monetary Occasions reveals that he desires to carry the cap on bankers’ bonuses.

My colleague Kalyeena Makortoff has protection of this on the enterprise dwell weblog.

The thought has already triggered a backlash. Andrew Sentance, who was a member of the Financial institution of England’s financial coverage committee through the monetary crash, instructed the In the present day programme this morning. He mentioned:

I feel it sends a slightly confused sign when persons are being squeezed by way of the price of dwelling and the federal government’s making an attempt to encourage pay restraint within the public sector. So to seem to permit bankers to have greater bonuses on the identical time doesn’t look very effectively timed.

There could also be some long term arguments for pursuing this coverage, however I feel the timing could be very unhealthy in the event that they did it now.

And in a Twitter thread beginning right here, Mick McAteer, a former board member on the Monetary Conduct Authority, says it is a “unhealthy concept” that can encourage aggressive danger taking.

Attention-grabbing dialogue on @BBCr4today about gov scrapping bankers bonus cap.
There’s quite a few explanation why it is a unhealthy concept.
Will encourage the kind of aggressive, danger taking socially ineffective market behaviours we actually dont want. 1/

— Mick McAteer (@MickMcAteer) September 15, 2022

The cap on bankers’ bonuses was launched as an EU rule after the bonus tradition in banking was seen as contributing to the danger taking that triggered the monetary crash. George Osborne and the Tory chancellors who adopted him by no means preferred it on precept, however after Brexit they shied away from pledging to eliminate it as a result of they realised that, whatever the financial arguments, the politics of such a transfer could be horrible.

However Liz Truss is a extra ideological prime minister than any of her fast predecessors. Kevin Schofield from HuffPost UK thinks populism might now be out of the window.

I attempt to monitor the feedback under the road (BTL) however it’s unattainable to learn all of them. If in case you have a direct query, do embrace “Andrew” in it someplace and I’m extra prone to discover it. I do attempt to reply questions, and if they’re of basic curiosity, I’ll submit the query and reply above the road (ATL), though I can’t promise to do that for everybody.

If you wish to appeal to my consideration rapidly, it’s in all probability higher to make use of Twitter. I’m on @AndrewSparrow.

Alternatively, you’ll be able to electronic mail me at andrew.sparrow@theguardian.com



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