'PM is dragging his feet on bank reform': Labour on attack as bonuses leap to record level - UK Politics - UK - The Independent

'PM is dragging his feet on bank reform': Labour on attack as bonuses leap to record level

Labour accuse Cameron of giving 'massive tax cut' to millionaires at a time when ordinary families are seeing their incomes shrink

Bankers’ bonuses leapt to record levels in April as the Government’s cut in the top rate of income tax came into effect, new figures reveal.

The disclosure provoked anger with Labour accusing David Cameron of giving a “massive tax cut” to millionaires in the City at a time when ordinary families are seeing their incomes shrink.

According to the Office for National Statistics, the average weekly bonus in the financial sector was £143 in April – a rise of 64.4 per cent compared with April 2012.

The dramatic rise came against a background of falls in bonuses over the last year, suggesting recipients had been delaying collecting them to minimise the amount of tax paid on their windfalls.

The surge in bonus payments could also have cost the Treasury tens of millions of pounds in last tax revenues. The figures cover people working in banking, insurance, pensions and other financial institutions.

George Osborne announced in last year’s Budget that the top rate of tax, levied on earnings of more than £150,000, would drop from 50p to 45p in the financial year which started on 6 April.

The ONS said some businesses had told it that they were deferring bonuses normally paid in March to April.

Only once since January 2000, when the monthly figures were first compiled, has the average weekly payment topped £100 – in December 2006 when end-of-year bonuses took the average to £107.

In angry Commons exchanges, Ed Miliband, the Labour leader, said: “The fact is that bonuses in the City were up by 64 per cent in April – and why? Because the Prime Minister has cut the top rate of income tax from 50p to 45p. People took their bonuses in April and were given a massive tax cut as a result.”

He added: “For all his tough talk, the reality is the Prime Minister is dragging his feet on banking reform. Business lending is still falling, bonuses are rising and while ordinary families are suffering, he is giving a massive tax cut to the bankers.”

Mr Cameron replied that City bonuses would be 85 per cent lower in 2012-13 than they were in 2005-08 when Mr Miliband and Ed Balls, the shadow Chancellor, were working in the Treasury.

He told the Labour leader: “It does not matter what you say. You cannot get over the fact that they presided over boom and bust, the collapse of the banks and the failure to regulate.”

Mr Cameron said: “They cannot hide their dreadful record and they ought to start with an apology.”

Earlier in the year Goldman Sachs raised the idea of deferring bonuses to April to minimise staff tax liabilities.

It abandoned the move after Sir Mervyn King, the Bank of England governor, condemned the plan as “depressing” and warned bankers against misjudging the public mood.

At the time a senior City adviser told the Independent he would be “absolutely amazed” if financial institutions did not delay bonus payments until April to take advantage of the lower tax rate.

The TUC’s general secretary, Frances O’Grady, said yesterday: “For all the talk about cracking down on tax dodging, it is clear that George Osborne was in league with top bankers to ensure they could get round the 50p tax rate by changing the date when their bonus was paid.

“If there is to be no effective cap on bonuses, then we should at least ensure the public purse benefits to the full by effectively taxing every bonus and salary hike enjoyed by super-rich bankers.”   

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Senior QA Engineer - Agile, SCRUM

£35000 - £50000 per annum + benefits: Ashdown Group: Senior QA Engineer (Agil...

Marketing Executive - West Midlands - £28,000

£26000 - £28000 per annum: Ashdown Group: Digital Marketing Executive (SEO, PP...

Retail Business Analyst

£40000 - £50000 Per Annum: Clearwater People Solutions Ltd: Our retail client ...

Senior C++ Developer

£400 - £450 Per Annum possibly more for the right candidate: Clearwater People...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week