Opinion

UK shamelessly axes bankers' bonus cap as more than one million children experience destitution

The cap on bankers’ bonuses lifts today, paving the way for more millions to head into the financial sector at a time when one million children are growing up in destitution in the UK. We take a look at whether the cash could be put to better use

bankers bonus cap

Bankers in the City will be able to earn more from bonuses despite fears that this could lead to greater risk-taking. Image: Expect Best / Pexels

The cap on bankers’ bonuses has been lifted at a time at a time when the cost of living crisis is leaving millions of Brits struggling to get by.

One of the few measures from Liz Truss and Kwasi Kwarteng’s disastrous Mini-Budget to survive, the move paves the way for bankers to rake in millions rather than being limited to a maximum of two times a basic salary.

The European Union originally brought in the cap in 2014 to clamp down on risk tacking that left the financial world vulnerable to 2008’s financial crash. The Trade Unions Congress has criticised the decision, warning that it paves the way for a return to the “greed is good” culture behind the global crisis.

The cap lifted on 31 October but news of its demise was first revealed on 24 October when it shared headlines with another story that showed the huge inequality in the modern day UK.

On the one hand, news sites showed the controversial report that the bankers’ bonus cap was to be scrapped.

On the other, the shameful news that one million children are living in destitution in the UK.

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Buying flash watches and growing one’s property portfolio may be all well and good, but surely there’s potential for a bit of that cash to filter down beyond what is required from the taxman?

The European Banking Authority’s most recent analysis for 2019 found that there were 3,519 bankers working in the UK earning more than £1m a year.

A further 27 UK bankers earned more than £10m while two UK-based asset managers were paid between £38m and £39m – about the same West Ham paid for footballer Mohamed Kudus this summer. One merchant banker was paid £64.8m – the figure Manchester United paid for Rasmus Hojlund, to keep the football analogy going.

Tot it up and it shows high-earning bankers are already raking in around £412m from their salaries and bonuses – and that figure is likely to be significantly higher now thanks to inflation.

The Joseph Rowntree said 3.8 million people – including one million children – are destitute in the UK and more than half are receiving universal credit. The anti-poverty group is calling for an Essentials Guarantee, as is The Big Issue’s End Housing Insecurity Now campaign, which would raise universal credit to help people at least afford the basics.

For single people aged 25 and over, the universal credit standard allowance is £35 a week short of this level. That £412m could help 226,373 people hit that Essentials Guarantee for a year.

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Single people under the age of 25 are £57 a week short – £412m could help just under £150,000 youngsters live a better life.

As for couples, 104,251 people over the age of 25 could benefit each year as could 84,288 under the age of 25.

You can probably bank on the government failing to fix the UK’s broken safety net at this month’s Autumn Statement.

Don’t expect any further limit to bonuses from former banker Rishi Sunak either, but the extra cash flowing into pockets in the City could certainly do a lot more to leave no one behind.

Do you have a story to tell or opinions to share about this? We want to hear from you. Get in touch and tell us more.

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