Bonuses across the economy were all but flat in the year to March 2013 – but finance payouts up 4% to £38.6bn once April figures are taken into account
Britain's best-paid workers delayed bonus payments worth up to £1.7bn until April to take advantage of George Osborne's 5p cut in the top rate of tax, according to evidence collected by the Office for National Statistics.
Bonuses across the economy were all but flat in the year to March 2013, increasing by 1% compared with the same period a year ago, to £36.9bn, or an average £1,400 per employee.
But the ONS said the picture was distorted by firms deferring payouts until April, when those earning over £150,000 a year would pay income tax at 45p instead of 50p in the pound.
Payouts were £1.7bn higher in April than the same month last year, with the banking and finance sector accounting for £700m of the increase.
Some of the rise since April 2012 is likely to reflect a more generous bonus round – taking January to April together, bonuses in the finance sector were up by 13% on last year, at £10.3bn. But the ONS said businesses had reported deliberately deferring their bonus rounds so that employees could benefit from the tax cut.
If the £1.7bn had been handed over to staff before the 50p top rate was scrapped it would have brought the Treasury an extra £85m.
Reducing the 50p rate of tax brought in by Alistair Darling at the height of the economic crisis in 2009 was the most controversial policy in last year's "omnishambles" budget.
Treasury officials insisted yesterday that the higher rate had generated little, if any, extra revenue. A spokesman said the bonus data were, "broadly in line with the Budget forecast".
However, labour market expert John Philpott, of consultancy the Jobs Economist, said, "I just find it deplorable: there should have been a failsafe built into the policy that allowed for some sort of clawback if that behaviour was seen to occur. I don't see why that's any less immoral than all the tax avoidance practices the coalition have criticised."
Labour said the data helped hammer home its argument that the majority of people in Britain are suffering a "cost of living crisis", while the lucky few are thriving.
Chris Leslie, shadow financial secretary to the Treasury, said, "working people are worse off under the Tories as prices continue to rise faster than wages. But while ordinary families on low and middle incomes are seeing their living standards fall those at the top are reaping the benefits of David Cameron's tax cut for millionaires."
Taking the 2012-13 financial year as a whole – and excluding the April payouts – finance workers banked the biggest bonuses, according to the ONS, taking home an average of £11,900 per employee.
The sector was followed by mining and quarrying, where the average bonus was £6,700; and IT, where it was £4,400.
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| The Leadenhall Building (the Cheesegrater) & 20 Fenchurch Street (the Walkie Talkie) dominate the City skyline. Finance bonuses are up on 2012.Excluding the financial sector, total bonuses across the rest of the economy in 2012-13 were £23.6bn, almost as high as during 2007-08, before the UK plunged into recession. |
Despite high-profile stories about lavish payouts for top public sector bosses, bonuses remain largely a private sector phenomenon, the ONS data shows.
The average bonus in the public sector was £300 per employee – falling to £100 once the bailed-out banks, including Royal Bank of Scotland, are excluded. Private sector employees received bonuses worth on average £1,700.
Tuesday's findings about financial services firms delaying payments to cut their employees' tax bills will fuel controversy about remuneration practices in the sector, after research showed that many firms were planning to increase salaries, to bump up their staff's total pay as the European Union prepares to cap bonuses.
Article Source : http://www.guardian.co.uk
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