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Alistair Darling criticises 'unjustified' city bonuses

16/02/2008

Chancellor of the Exchequer Alistair Darling has criticised large city bonuses, in an interview with the Daily Telegraph.

Mr Darling claimed that with the country heading into an economic downturn, company boards must be able to justify handing out the considerable payments.

"People get fed up if they see others getting great big bonuses and they can't actually see what they did. It can be extremely frustrating," the chancellor said.

"Boards need to ask themselves, 'Are we behaving reasonably? … If you're leaning over the fence talking to your next-door-neighbour, can you justify what you've done?"

City bankers made an estimated £7 million in bonuses last year, despite the global economic turmoil.

And the chancellor's comments follow considerable criticism from the City regarding the government's changes to capital gains tax and rules on non-domiciles.

Mr Darling, however, was keen to question the large bonus schemes.

"There is absolutely nothing wrong with giving somebody a reward but at the present time when people are going through these difficulties that's something the boards have got to look at," he said.

"They should behave responsibly. You have to ask – can you justify this? Can you say hand on heart that this is the right thing to do? If you can't justify it to your next-door neighbour you should think again".

In the interview the chancellor also delivered a bleak assessment of the economic outlook for Britain, claiming the country was facing a "very difficult year" and predicted that house prices would "flatten".