Steve McCabe – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Steve McCabe on 2016-10-07.

To ask Mr Chancellor of the Exchequer, pursuant to the Answer of 12 September 2016 to Question 44306 and with reference to ONS figures detailing the record amount of bonuses paid in Great Britain last year, released in Average weekly earnings, bonus payments in Great Britain: financial year ending 2016, on 15 September, what assessment he has made of the effectiveness of his policies in curbing excessive performance bonuses; and what plans he has to tackle inequality in performance bonuses between industry sectors.

Simon Kirby

The UK is at the forefront of global efforts to tackle unacceptable pay practices in the banking sector and has the toughest regime on pay of any major financial centre.

Firms are now required to have policies in place to defer, reduce, cancel or clawback bonuses in the event that poor performance or misconduct comes to light and the Government expects firms to be proactive in their application of these policies. Used in this way bonuses can be an effective incentive for staff to act in the long term interests of a business.

The Government’s efforts have resulted in a restructuring of pay including a significant reduction in cash bonuses, and a better alignment of risk and reward in the financial sector.

Outside the financial services sector, it is for businesses to decide how they remunerate their employees provided minimum legal requirements are met. The ONS statistics show that bonuses as a percentage of total pay for sectors other than finance and insurance have remained relatively stable since 2000 at an average of 4.0%.

The Government intends to publish a consultation document later this year that will set out a range of options for strengthening corporate governance and the way executive pay is set and reported, including greater disclosure of the targets that trigger bonus payments to company directors.