Liz Truss and Kwasi Kwarteng’s radical economic reforms to include end to all EU laws
Liz Truss and Kwasi Kwarteng are drawing up plans for a radical overhaul of the UK’s regulatory regime, including an end to the cap on bankers’ bonuses, i understands.
The new Chancellor will make a fiscal statement to the Commons next Friday, revealing how he plans to fund the energy bills freeze and setting out details of upcoming tax cuts.
He is also expected to say that the Government is repealing the existing EU-imposed cap on how much bankers can be paid in bonuses, on top of their regular salaries – although a final decision may come in a separate statement later in the autumn on changes to City regulation.
The announcements form part of a package of reforms due to be introduced in the coming months which the Prime Minister and Chancellor believe will boost Britain’s long-term growth.
Whitehall insiders expect wide-ranging deregulation, which will include an end to all laws which originated in Brussels, and another attempt to reform the planning system to encourage housebuilding.
The Government is braced for opposition from backbench MPs, who fear a political backlash over economic reforms which could prove hugely controversial and take years to bear fruit. Planning reform in particular has been attacked by homeowners who fear it will lead to overdevelopment.
But Ms Truss and Mr Kwarteng are understood to have told officials they intend to take a radically different approach from that of Boris Johnson, whom they believe shied away from divisive reforms even where they could be presented as a “Brexit dividend”.
The Chancellor is likely to agree to requests from the City to end the current cap on bankers’ bonuses, which prevents companies from paying a bonus of more than 200 per cent of salary, according to the Financial Times.
The cap was introduced by the EU in 2014 despite fierce opposition from the British Government and Mr Johnson, then the Mayor of London, who argued it would drive the finance industry away from Europe.
But earlier this year, wheni reported the bonus cap was now in question, Mr Johnson’s administration committed to keeping it in place indefinitely.
The Institute of Economic Affairs, a free-market think-tank close to Ms Truss, backed the idea of scrapping the cap. Research fellow Len Shackleton said: “A continuing cap on bonuses will over time add to the difficulties of international recruitment and undermine the competitiveness of the UK’s financial sector, one of our few clear sources of competitive advantage (and, incidentally, huge amounts of tax revenue). If the Government wants to make progress through the swamp of regulation which holds our economy back, it must be bold.”
But Sharon Graham, head of the Unite union, hit out at the proposed policy, saying: “Workers will be appalled and angry at these plans. When millions are struggling to feed their families and keep the lights on, the Government’s priority appears to be boosting the telephone number salaries of their friends in the City. Britain’s economy is now dominated by rampant profiteering. Removing the cap on banker’s bonuses will make that worse.”