Labour will step up its attack today on the “culture of excessive bonuses” with a warning that bumper City payouts are damaging the economy and wider society.
The party is using an opposition day debate in the Commons to call for large bonuses in banks bailed out by the taxpayer to be paid only when they reflect “genuinely exceptional performance”.
Labour strategists are keen to continue to make the political running after Royal Bank of Scotland chief executive Stephen Hester waived his bonus of almost £1 million following a threat by Ed Miliband to put it to a Commons vote.
Yesterday six senior executives at taxpayer-subsidised Network Rail followed suit and agreed to forgo their bonuses in the face of a political storm over the scale of the planned awards running into hundreds of thousands of pounds.
Chief executive Sir David Higgins, who was among those in line for the payouts, announced the money will instead be paid into a safety improvement fund for railway level crossings
The issue was due to be discussed on Friday at a NR meeting, which has now been postponed.
Transport Secretary Justine Greening, who planned to attend the meeting to vote against the bonus payments, described the executives decision as “sensible and welcome”, adding it was a sign that they had recognised the “strength of public opinion”.
It comes a week after NR pleaded guilty to failings that led to the deaths of two schoolgirls hit by a train at a level crossing at Elsenham in Essex six years ago.
Shadow business secretary Chuka Umunna will use his Commons speech to demand a halt to what he calls the “culture of excessive bonuses” and for greater responsibility in the City and beyond.
He will argue that such lavish payouts have damaged Britain's economy and its society, as well as being bad for business.
Labour believes that it has captured the public mood, amid popular revulsion at the perceived excesses of the City at a time of economic austerity.
But with feelings running high, the party has also faced criticism that it is stoking anti-business sentiment which risks driving banks and other financial institutions overseas.
Shadow chief secretary to the Treasury Rachel Reeves said big bonuses should be taxed more heavily.
She told ITV's Daybreak: “We want bonuses to be taxed properly and, in the last year of the Labour government, we taxed bonuses of more than £25,000 at 50%. We think if we did that again we could bring in £2 billion to help pay for a fund for youth jobs.”
She added: “We would like to see bonuses reined in, and bonuses should only be paid for exceptional performance - especially these huge bonuses of hundreds of thousands, or even millions of pounds.”
Ms Reeves said the pay of people at the top of firms had increased at a far greater rate than those lower down in companies.
“Over the last year what you've seen is the pay for directors of firms go up by 50% whilst ordinary workers aren't seeing any pay rises at all.
“They are seeing prices go up for their gas, electricity, train fares, petrol, and yet their wages haven't and it doesn't seem right, especially when banks caused the crisis in the first place.
“They are getting a tax cut this year whilst everyone else is seeing their taxes rise.”
She added that she would not deny ordinary workers their bonuses.
“For the average person working in a bank branch a bonus for meeting their targets - I don't have a problem with that.
“But there needs to be much more transparency and that is one of things Labour are calling for today.
“Also, having a worker on the committees that decide the wages at the top of organisations so firms are accountable to those who work there and their shareholders.”
Ms Reeves said she applauded Sir David and Mr Hester for forgoing their bonuses, adding: “It's the right thing to do in the circumstances we face at the moment.”