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.
<p>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.</p><p>
</p><p>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.</p><p> </p><p>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.</p><p> </p><p>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%.</p><p> </p><p>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.</p><p> </p>
