Anas Sarwar refuses to criticise Labour plans not to reinstate banker bonus cap

Anas Sarwar has declined to criticise his party leadership south of the border after the shadow chancellor said Labour would not reinstate a cap on bankers bonuses if the party won the next general election.

The Scottish Labour leader had previously accused Liz Truss of being a “Thatcher tribute act” who would rather “boost bankers’ bonuses than help those in need.

It comes as shadow chancellor Rachel Reeves said she instead wants to be a “champion” of the financial services sector as she bids to drive up economic growth.

The cap was introduced in the wake of the 2008 financial crisis to limit annual payouts to twice a banker’s salary.

But it was scrapped last year after a decision was made in Liz Truss’s brief spell in No 10 by her chancellor Kwasi Kwarteng.

Reeves’ decision to continue allowing unlimited payouts to bankers marks another major shift in Labour’s direction, with Jeremy Corbyn having labelled the financial sector “speculators and gamblers who crashed our economy” during his leadership of the party.

In an interview with the BBC, Reeves, a former Bank of England economist, said: “The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances.

“But that has gone now and we don’t have any intention of bringing that back.

“And as chancellor of the exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK.”

The move comes as Labour was pledging to “unashamedly champion” the financial services sector as it seeks to win over big business in the election year.

The party on Wednesday published a plan it said would streamline regulations, with a promise to slim down the Financial Conduct Authority’s (FCS) handbook by cutting out “outdated and prescriptive rules”.

It follows a review, carried out by shadow City minister Tulip Siddiq, which included input and advice from top City of London figures, including former HSBC chairman Sir Douglas Flint and Barclays chairman Sir John Kingman.

In her forward to the report, Reeves said Labour would be both “proudly pro-business, pro-worker” in government, with former FCA chairman Charles Randell calling it a blueprint for the “inclusive and sustainable growth of the financial sector”.

It sees the party take inspiration from Margaret Thatcher’s “Tell Sid” advertising campaign in the 1980s, most recently referenced by Chancellor Jeremy Hunt at the autumn statement, and which encouraged people to buy shares amid the privatisation of state-owned businesses.

Labour said it would “look to deliver a modern “Tell Sid” campaign for retail ownership to highlight the value of British people supporting British businesses”.

Speaking with STV News on Wednesday, Sarwar declined to speak out on the u-turn, adding that he is “not here to defend bankers bonuses”.

He said: “We were right to call out, I think, the UK Government for the lifting of the cap in the middle of an economic crisis.

“I think I described it at the time as a further demonstration of an economically illiterate, morally bankrupt Tory party. I still do.

When asked if he still believed that, he replied: “I still believe that to be the case that this is a morally bankrupt, economically illiterate Tory party.

When asked if Sarwar believed removing the cap is “still economically illiterate and morally bankrupt”, he responded: “I stand by what I said when the Conservatives made that announcement. It demonstrated the wrong priorities. We were in the midst of an economic crisis and they thought our priority was to lift the cap on bankers bonuses. A further example of their economically illiterate, morally bankrupt nature.

When asked if it was the right priority now, he responded: “So, we’re not in government and if we were to be in government, we have got to fix a lots of problems that the Tories have created.”

The SNP’s social justice spokesman David Linden accused Sir Keir of “offering no change from broken Brexit Britain”.

“By admitting he would slash funding for public services while helping the super-rich, Starmer has shown he has the wrong priorities and is on the side of the wealthy Westminster elite, not ordinary working families,” he said.