Society 'should be shamed' by £14bn city bonuses

12 April 2012

Record bonuses paid to City workers were yesterday condemned as "society's shame".

The chief executive of Barnardo's joined a growing list of politicians, trade unions and charities who have lambasted this year's £14billion payouts - the biggest Britain's financial community has ever known.

Soaring stock markets and a rash of company takeovers have pushed financial firms' profits to record levels. As a result, 4,200 "City slickers" have received bonuses of more than £1million each.

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Record bonus payout: Executives are fueling spiralling demand for luxury goods, like super-yachts and plush cars

Some have even taken home tens of millions of pounds in addition to their annual salary. The latest Office of National Statistics figures show that up to April this year, bonuses across the economy went up by 24 per cent to £26.4billion.

However the biggest are to be found in the City - this year, the financial services sector earned £14.1billion in bonuses, up 30 per cent on last year.

It is behind the massive house price inflation in Britain's most sought-after areas, with prices in Kensington and Chelsea having risen by more than a third annually since 2000.

Economists have warned that the growing number of super-rich is creating an underclass. BBC Radio 4's Today programme yesterday revealed research showing that the chief executives of the FTSE 100 companies received 67 times the pay of their average employee.

And according to the Institute of Fiscal Studies, incomes for the poorest fifth of society fell by 0.4 per cent last year.

Brendan Barber, general secretary of the TUC said: "The fortunes of the City super-rich show no sign of abating, while thousands of vulnerable workers languish on poverty wages."

Martin Narey, chief executive of Barnardo's, said: "The inequality this represents should shame us as a society. Right now, the life expectancy of children born in some parts of Glasgow is lower than life expectancy of children born on the Gaza strip.

"Yet just one quarter of the annual amount paid in City bonuses would halve child poverty in the UK."

But Richard Lambert, director-general of the CBI, said: "Bonuses, like other performance-related pay mechanisms, are a very effective way to motivate employees and are used across the entire business spectrum, not just the financial services sector."

Goldman Sachs - the world's richest bank - last year awarded a total of £8.4billion in bonuses.

But some of biggest bonuses are in hedge fund firms. This year Noam Gottesman and Pierre Lagrange, both 44, of London-based GLG Partners were each paid up to £250million in addition to their salaries.

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Three other bosses apart from Bob Diamond earned eight-figure salaries. As chief executive of Reckitt Benckiser - who make household products such as Cillit Bang and Mr Sheen - Bart Becht earned £22m last year. Boss of Punch Taverns pubs group Giles Thorley took home £11m.

Former chief executive of BP Lord Browne received £11m. He resigned earlier this year after it was revealed he had lied in court.

The figures are from the Guardian and pay consultancy Reward Technology Forum's annual survey of executive pay at the FTSE 100 companies.

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