Plans to curb excessive bonus payments

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The excessive bonus culture, a subject which has dominated the news this year, rears its head again after Chancellor Alistair Darling has responded to calls for a new commission to restrict bonus payments.

Bank bonuses, in particular, have sparked public anger and have been the subject of heavy criticism since it is banks that are being blamed for the financial crisis.

One hundred public figures joined a pressure group’s campaign for a High Pay Commission, to act as a watchdog over excessive City salaries.

The campaign compared wages of those earning high City salaries to those who are earning minimum wage, working a 40-hour week.

It was concluded that an individual earning the minimum wage would have to work more than 200 years in order to receive the same annual salary as a FTSE 100 chief.

The campaign’s backers include Liberal Democrat Treasury spokesman Vince Cable and Labour MP Jon Cruddas.

The campaign said that a High Pay Commission was needed in order to limit excessive bonus payments, in the same way that the Low Pay Commission was set up over a decade ago to advise on the minimum wage.

In response, the Chancellor said: “I do think that Government has a role in trying to stop undesirable practices, such as excessive risk-taking through bonus payments in the banking system where we all stand to lose if that goes wrong.”

“But generally, I think that pay agreements ought to be reached by employers and employees meeting together,” added Mr Darling.

Reports today have suggested Barclays is looking to recruit almost half a dozen JP Morgan bankers with bonus deals totalling A?30 million.

Under new Treasury proposals, the Financial Services Authority will be able to control bonuses in all banks, however, the new measures are likely to require legislation.

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