John McDonnell warns he plans to ban ‘grotesque’ bankers’ bonuses
The shadow chancellor called on the City to voluntarily ditch their bonus system or face draconian curbs by the Treasury.
Speaking to the Financial Times, he said that a future Labour government would explore ways to crack down on extravagant payments.
“If it continues and the City hasn’t learnt its lesson, we will take action, I’ll give them that warning now,” he said. “If we have to take action, we will. People are offended by bonuses.”
He added that he would launch a consultation on possible options which could range from increasing shareholder power to restrictions on the size of bonuses.
He also said he wanted to ban share options, golden handshakes and golden goodbyes.
Mr McDonnell said: “It’s become part of the culture and it is so separate and distinct and isolated from the rest of the real-world economy and that’s why people are so offended by it.
“It’s a reflection of the grotesque levels of inequality that people now find so offensive.”
Last week, Jeremy Corbyn also hinted that the City of London could face increased intervention from a Labour government, such as a £4.7bn-a-year financial transaction tax.
According to the Office for National Statistics data, annual bonuses account for almost a quarter of the country’s total pay in the financial services industry.
In 2017, the value of all bonuses paid in Britain was a record-high of £46.4bn, an 11.3 per cent increase on the previous peak in the 2008 financial year.
Speaking to The Times, Stephen Jones, chief executive of UK Finance, which represents UK banks, was critical of the shadow chancellors’ plans.
He said: “It would be disappointing and damaging if the current policy was changed in a way that damaged the industry’s international competitiveness and the UK’s place as a world-leading location for financial services.”
Mr Jones added that the bonus structures had already been reformed to ensure that they paid out only for long-term performance, with an option to claw back the bonus if the banker was later shown to have failed.