Bankers bonuses stay at last years level, £13.6 billion
The banking sector has come under fire for failing to tackle the bonus culture after it paid out £14 billion in bonuses this year, the equivalent of every worker in the sector receiving a bonus of £12,500.
Figures released by the Office for National Statistics (ONS) reveal that bonuses paid to employees in the financial and insurance sectors were up by £2 billion on 2008-09, the height of the financial crisis and were 58 per cent higher than in 2000-01. The bonuses paid in the financial and insurance sectors were identical to what was paid in 2009-10.
The government has also been criticised for failing to tackle the bonus culture of the banks. Some commentators believe that the paying of such high bonuses encourages a culture of “casino banking” within the sector that contributed towards the financial crisis.
The figures showed that although the financial sector employs just four per cent of UK workers it paid out 40 per cent of the total bonuses paid to UK employees. However, the bonuses of £13.6 billion paid out in this year and the previous one came despite government ministers pledging to ensure the banker bonus culture was curbed.
Overall, the private sector accounted for 77 per cent of total bonuses and the public sector received 23 per cent. The average worker in the private sector received a bonus of £1,670, almost ten times higher than the average bonus of £180 received by public sector workers.
Since the financial crisis hit in 2007-08 total bonus payments have fallen from around £42 billion to just over £34 billion. The fall has been less severe for bonuses paid in other sectors than it has for bonuses paid to people in the financial sector.
The public has remained angry about the issue of bankers’ bonuses as many people’s perception is that nothing has changed and that the banking practices that contributed towards the credit crunch still go on and have not been addressed. Additionally, the effects of the recession are being felt more at the sharp end than they were at the height of the credit crunch. Therefore, generous bonus payments in such a tough economic climate seems unfair to many.
The Project Merlin agreement which the big four banks, Barclays, HSBC, RBS and Lloyds signed up to was designed to set lending targets from banks to small and medium sized businesses (SME’s) and moderate bankers remuneration.
Lord Oakeshott, the former Liberal Democrat Treasury spokesman, said: "These banking bonus figures show sheer greed. Our country won’t believe 'we are all in this together' until the Government gets a grip on bank bonuses. Our broken banking system is just as toxic for Britain as politicians and police crawling up to Murdoch. We must get to the bottom of both scandals."
Brendan Barber, the general secretary of the TUC union, said: "The Chancellor's austerity message has failed to reach the City, where a small clique of super-rich bankers have grabbed 40 per cent of all bonuses paid out in the UK. City bonuses are still far too high and the incentives for risky and damaging decisions far too great, especially when bankers know that taxpayers always have to pick up the tab."
A Treasury spokesman said: "That the overall bonus level has not increased reflects the government's commitment to tackle unacceptable bonuses as part of the wider financial crisis.
"It is essential that remuneration, while remaining flexible, does not encourage excessive risk-taking or threaten financial stability
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