Steve McCabe – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Steve McCabe on 2016-10-07.

To ask Mr Chancellor of the Exchequer, pursuant to the Answer of 12 September 2016 to Question 44306, what assessment he has made of the effect of his Department’s policies on trends in shifts from bonuses to salaries in the financial sector; and what plans he has to tackle income inequality in the UK.

Simon Kirby

The UK is at the forefront of global efforts to tackle unacceptable pay practices in the banking sector and has the toughest regime on pay of any major financial centre.

Firms are now required to have policies in place to defer, reduce, cancel or clawback bonuses in the event that poor performance or misconduct comes to light and the Government expects firms to be proactive in their application of these policies. Used in this way bonuses can be an effective incentive for staff to act in the long term interests of a business.

The Government’s efforts have resulted in a restructuring of pay including a significant reduction in cash bonuses, and a better alignment of risk and reward in the financial sector.

Income inequality is lower than it was in 2010, and close to its lowest level since the mid-1980s. Furthermore, distributional analysis published by the Treasury alongside Budget 2016 shows that the richest fifth of households are projected to pay a greater proportion of taxes in 2019-20 than in 2010-11 as a result of government policy – and more than all other households put together.

The government is committed to making Britain a country that works for everyone through tacking injustices and ensuring that everyone, whatever their background, is able to go as far as their talents can take them.