The supertax on bankers' bonuses has failed, MPs warned last night as they demanded curbs on the pay and perks of all top earners, not just those in the City.
More than 100 MPs have signed a Commons motion calling for the setting up of a "high pay commission" to limit the remuneration of the highest earners. The move comes as banks prepare to announce big profits and growing signs that bankers are escaping the 50 per cent supertax on bonuses of more than £25,000 because it is being absorbed by their employers.
The supertax was announced by Alistair Darling in his pre-Budget report last month amid mounting concern over bank bonuses and the £850bn bailout of the banks by taxpayers after the financial crisis. The Chancellor's main aim was to deter banks from paying bonuses but this has not worked, MPs claim. One side effect is that the Treasury is receiving more tax revenue than the £500m it originally expected.
The banks' actions have fuelled demands among Labour MPs for a commission to regulate top pay to mirror the Low Pay Commission, which recommends the national minimum wage for the lowest earners.
Although ministers have not backed the call for a new commission, Labour MPs and grassroots activists will press for the plan to be included in the party's general election manifesto. They claim it would enjoy widespread public support and bolster Labour's pitch to be acting for "the many" while accusing the Conservatives of representing the interests of "the few".
John Battle, a former minister who tabled the Commons motion, told The Independent: "As we come out of a recession into economic growth it is now the time once again to consider the disparity in incomes that exists within the UK. We cannot begin to examine or develop a fairness argument without examining the effects that increased wealth concentrated at the top of society has caused to social inequality."
He added: "Following the financial crash and the aftermath of the credit crunch, bailing out the banks this is an issue that we cannot ignore anymore. It's not simply a case of taking away from bankers' bonuses as they are the target of public concern, the key is to address wage imbalances and bring about an end to inequality through excessive pay."
Gavin Hayes, general secretary of the democratic left pressure group Compass, which is campaigning for a new commission, said it was "imperative the Government now establishes a high pay commission if we are to avoid another financial crisis".
The Commons motion has been backed by 73 Labour MPs, 19 Liberal Democrats and nine MPs from minority parties.
It says the proposed commission should examine the effects of high pay on the economy and society and the links between "excessive pay" and the financial crisis. It points out that in the past 30 years, people on median incomes have seen their pay increase at less than the average while the super-rich, including chief executive officers, have seen their pay increase to 76 times that of the average worker.
The motion says the commission should investigate the questionable link between economic performance and high pay and the social effects of inequality due to the increase of wealth concentrated at the top of society. It also calls for an inquiry to bring all the facts into the public domain.Reuse content