Labour will not reinstate a cap on bonuses for bankers, Shadow Chancellor Rachel Reeves has confirmed.

The remarks, in an interview with the BBC, have been leapt on by political rivals.

The SNP pointed to comments made by Anas Sarwar last year when he described Liz Truss’s decision to scrap the "economically illiterate and morally bankrupt".

The limit was introduced in the wake of the 2008 financial crisis to limit the eye-watering annual payouts. Even then it still allowed those in industry to receive a bonus of up to twice their annual salary.

The plan to remove the limit was announced in October 2022 by the then chancellor Kwasi Kwarteng in his mini-budget.

It was one of his few policies to survive.

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In an interview with the BBC, Ms Reeves, a former Bank of England economist, said: “The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances.

“But that has gone now and we don’t have any intention of bringing that back.

“And as chancellor of the exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK.”

Ms Reeves and other senior Labour figures had been vocal critics of the Tories’ decision to axe the cap during a cost-of-living crisis.

Just three months ago, the Shadow Chancellor criticised the move to allow unlimited bonuses to be earned again “in the midst of their cost-of-living crisis”.

Writing in the Daily Record following the mini-budget, Mr Sarwar said: “Last week’s mini-budget demonstrates how economically illiterate and morally bankrupt the Tories are.

“They have lifted the cap on bankers’ bonuses and given a tax cut to those at the very top.”

SNP MSP Kenneth Gibson said: "Labour coming out in support of Tory plans for unlimited bankers' bonuses will be a surprise to nobody - but yet again it shows how little influence their Scottish branch office has.

"Anas Sarwar said when the Tories lifted the cap on bankers' bonuses that it was 'economically illiterate and morally bankrupt.'

"It is now essential that Anas Sarwar, and the rest of Labour in Scotland, disown Rachel Reeves' plans, call out their Westminster bosses and stand up for working families in Scotland."

“It tells you everything you need to know about this Government,” she said.

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Ms Reeve's interview came as the party published a new plan on streamlining regulations in the city.

In her forward to the report, the Shadow Chancellor said Labour would be both “proudly pro-business, pro-worker” in government, with former FCA chairman Charles Randell calling it a blueprint for the “inclusive and sustainable growth of the financial sector”.

 

It sees the party take inspiration from Margaret Thatcher’s “Tell Sid” advertising campaign in the 1980s, most recently referenced by Chancellor Jeremy Hunt at the autumn statement, and which encouraged people to buy shares amid the privatisation of state-owned businesses.

Labour said it would “look to deliver a modern 'Tell Sid' campaign for retail ownership to highlight the value of British people supporting British businesses”.

Elsewhere in the plan, Labour said it would boost the development of regional financial centres, as well as exploring the expansion of longer-term fixed-rate mortgages.

Proposals also include an ambition to make the UK a “global standard-setter” for using AI in financial services, as well as backing for securities tokenisation and a central bank digital currency.