Plan to scrap bankers' bonus cap deemed unfair amid pay cuts and 'huge risk' to economy

Removing the banker bonus cap would be unfair to million people facing poverty and repeating mistakes that led to 2008 financial crash, Chancellor says.

Kwasi Kwarteng faces heavy criticism after plans to lift 2014 restrictions - to help Britain's struggling economy 'go for growth', he will say - has been revealed.

The Trades Union Congress (TUC) says the move will come as cuts real wages are imposed on public sector workers and that "millions of people are struggling to keep their heads above water".

Mr. Kwarteng was also warned that it would mock promises to 'level the country' as it would give London, the financial services centre, 'an extra boost'.

And former member Mick McAteer of the board of the Financial Conduct Authority, attacked a "bad idea" that would encourage aggressive risk-taking seen before the devastating crash of 2008.

RecommendedBoris Johnson's own moral failings diminished while around him

That would create incentives for the "mis-selling of toxic and socially unnecessary financial products", he warned, adding: "I'm not sure one understands how dangerous fierce competition can be."

Frances O'Grady, the TUC General Secretary, said: "Nurses have been given pay cuts in real terms. City leaders received unlimited bonuses."

Caroline Lucas, the Green MP, sarcastically tweeted, "Great - because surely the biggest problem in our economy right now is bankers are not being paid enough."

There was no immediate response from either Labor or the Liberal Democrats, who observed the period of national mourning following the Queen's death.

The cap, introduced by the EU over opposition from the UK, requires bonuses not to exceed 100% of fixed salary, or double with shareholder approval.

Its removal would come as millions of workers, particularly in the public sector, face effective pay cuts as wages fail to keep pace with inflation of around 10%.

< p>The Treasury said no decision had been made and Boris Johnson backed away from taking the step because he feared the political backlash over the cost-of-living emergency.

But Mr Kwarteng is keen to boost London's competitiveness against New York, Frankfurt, Hong Kong and Paris, according to people briefed on the discussions.

The cap has annoyed US investment banks that employ tens of thousands of people in London, as Wall Street typically offers lower fixed salary deals with big performance bonuses.< /p>

But Vince Cable, the former Liberal Democrat business secretary, called it "a disastrous step in revising mistakes before the financial crisis", saying of the Tories: "They never learn from the story."

Luke...