GOVERNMENT plans to lift a cap on bankers’ bonuses as millions of people face growing poverty have been condemned as “disastrous” in “an economy dominated by rampant profiteering.”

New Chancellor Kwasi Kwarteng is considering abolishing the cap, along with £30 billion in tax breaks for the rich, when he announces a “mini-Budget” next week to bolster Britain’s failing economy after 12 years of Tory rule.

The TUC said the move would coincide with real-terms pay cuts being imposed on public-sector workers and as “millions are struggling to keep their heads above water.”

Unite general secretary Sharon Graham pointed out that “telephone number” salaries would be boosted at a time when “millions are struggling to feed their families and keep the lights on.”

In a sarcastic comment on the proposal, Green Party MP Caroline Lucas said: “Excellent, because the biggest problem with our economy right now is definitely that bankers aren’t paid enough.”

Former Financial Conduct Authority board member Mick McAteer warned that lifting the bonus cap would create incentives for the “mis-selling of toxic, socially useless financial products” such as led to the finiancial crash of 2008.

Luke Hildyard, executive director of the High Pay Centre think tank, said: “Removing the cap would be a pro-rich ideological measure that sends a depressing message about who policy-makers listen to and think about when making economic policy.”

Fran Boait of Positive Money, a group campaigning for a fairer economy, said: “Gifting bankers uncapped bonuses at a time when millions of households are choosing between eating and heating is beyond tone deaf, it’s shameful.”

Mr McAteer asked: “What does scrapping bonus cap mean for levelling up? Why give London a further rocket boost?”

Andrew Sentance, formerly a member of the Bank of England monetary policy committee, questioned the move when the government wants “pay restraint in the public sector.”

The cap on bonuses was introduced by the European Union after the 2008 financial crash, which cost British taxpayers’ billions of pounds in bailouts for failed banks.

The cap was vigorously opposed by the then Tory-Liberal Democrat coalition government.

It limits bankers’ bonuses to double their annual pay packets — often already in the millions — or quadruple if shareholders agree.

In June, the TUC reported that bankers’ bonuses in the City of London alone totalled £5.9 billion following the coronavirus pandemic. In the same period, average monthly regular pay in Britain rose from £2,315 to £2,413.

TUC general secretary Frances O’Grady said yesterday: “Bonuses in the City are already at a record high.

“Working people are being walloped by soaring prices after the longest and harshest wage squeeze in modern history.

“The Chancellor’s number one priority should be getting wages rising for everyone, not boosting bumper bonuses for those at the top.”

She called for “£15 minimum wage, fund decent pay rises for all public-sector workers and introduce fair pay agreements for whole industries.

“That's how you boost pay packets in every corner of the country.”

Ms Graham said: “Britain’s economy is now dominated by rampant profiteering. Removing the cap on bankers’ bonuses will make that worse.

“Last year, Britain’s banks made £45.6 billion of profits. So the Chancellor’s signal to the City is ‘let it rip’ further and further, while the Bank of England lectures workers about pay restraint. You could not make it up.”

GMB union general secretary Gary Smith said: “Apparently, front-line workers asking for a pay rise risks increasing inflation, while allowing fat-cat bankers to trouser monstrous bonuses ‘attracts talent’ and ‘boosts the City.’

“It’s rank hypocrisy. There is no doubt whose side this government is on.”

Sources close to Mr Kwarteng said that no final decision had been taken on removing the cap.