Shadow Chancellor Rachel Reeves has told the BBC that Labour would not reinstate a bankers’ bonuses cap that was scrapped last year by the Conservative government. She said that although capping bankers’ bonuses was originally “the right thing to do to rebuild the public finances… that has gone now and we don’t have any intention of bringing that back.”

Momentum were quick to condemn the announcement as a “terrible decision totally out of touch with Labour’s values and public opinion.”

A spokesperson said: “For over forty years our economic model has sucked wealth from the country and enriched a few in the City. It even crashed the economy in 2008. Yet instead of learning the lessons from New Labour’s failures, Starmer and Reeves seem determined to repeat them.”

Rachel Reeves originally slammed the decision to lift the cap by Prime Minster Truss and Chancellor Kwarteng: as “Not a plan for growth, a plan to reward the already wealthy. A return to the trickle down of the past – back to the future, not a brave new era.”

Back then she added: “They have decided to replace levelling up with trickle down. As President Biden said this week, he is sick and tired of trickle-down economics. And he is right to be. It is discredited, it is inadequate and it will not unleash the wave of investment that we need.”

Just three months ago the Shadow Chancellor maintained her criticism, sharing a TUC report which said that the removal of the cap was fuelling a “greed is good” mentality. She complained: “Today – in the midst of their cost of living crisis – the Conservatives are scrapping the cap on bankers’ bonuses. It tells you everything you need to know about this Government.”

Now Labour plans to keep the lifting of the cap. It’s the latest in a series of capitulations to the City. As Labour peer Prem Sikka tweeted: “Starmer/Reeves gone full Tory. Will deregulate the City, cut capital requirements, no cap on bankers’ bonuses, no windfall tax, no curbs on shadow banking, but bailouts from public purse OK. Reckless practices will increase. How long to the next crash?”

Jeremy Corbyn MP criticised Reeves’ decision, describing it as a “political choice to enrich the wealthy”. The ex-Labour leader contrasted it with the party’s refusal to commit to scrapping the two-child benefit cap, which he called “a political choice to impoverish the worst-off”.

Scottish Labour leader Anas Sarwar agreed it was wrong to lift the cap, as did several Labour backbenchers. The General Secretary of the Fire Brigades Union, Matt Wrack, called Labour’s policy on bankers bonuses “utterly daft”.

Equally ominously, the Guardian claims to have seen a 24 page document in which Labour has promised to cut down 10,000 pages of regulations and ruled out a windfall tax on bank profits.

With public services, from the NHS to local authorities, education to housing, crying out for investment, this latest announcement looks complacent and foolish – and entirely unnecessary. It comes amid mounting speculation that Labour is planning to ditch its £28bn a year green spending pledge, already diluted by Keir Starmer earlier this month to an “ambition” to be reached in the second half of the next Parliament.

Image: c/o Mike Phipps