Kwasi Kwarteng has confirmed he will “get rid” of the cap on bankers’ bonuses, as he unveiled a series of tax cutting measures.
The cap was introduced in the wake of the 2008 financial crisis and limits annual pay-outs to twice a banker’s salary.
Speaking in the Commons on Friday morning, the chancellor highlighted scrapping the cap as one of the headline measures in his so-called mini-Budget.
“A strong UK economy has always depended on a strong financial services sector,” he said.
“We need global banks to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York.
“All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe.
“It never capped total remuneration, so let’s not sit here and pretend otherwise.”
“So we’re going to get rid of it. And to reaffirm the UK’s status as the world’s financial services centre.”
Labour has accused Liz Truss’ new government of giving “pay rises for City bankers, pay cuts for district nurses”.
Luke Hildyard, the executive director of the High Pay Centre think tank, has previously said removing the cap would be an “ideological measure” that favours the rich.
“Removing the cap would be a pro-rich ideological measure that sends a depressing message about who policymakers listen to and think about when making economic policy,” she said.