Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what assessment he has made of the effects of performance bonuses on short-termism in the financial sector.

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.

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.

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.