UK Politics

Prime Minister's Questions: Cameron out of touch on bonuses, says Miliband

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Media captionDavid Cameron said Ed Miliband was putting out "completely irresponsible stories" about benefits

Labour leader Ed Miliband has accused David Cameron of being "out of touch" for opposing European Union plans to cap bankers' bonuses.

He claimed the prime minister was "straining every muscle" to help the rich while doing little for the poor.

But Mr Cameron said the Labour leader wanted to "play and pose politics", while the UK needed to do all it could to attract the world's largest banks.

The UK was the only EU country to oppose the cap in a vote on Tuesday.

Under the plan, bonuses would be limited to 100% of a banker's annual salary - or to 200% if shareholders approve.

During a lively Prime Minister's Questions session, Mr Miliband said Mr Cameron and Chancellor George Osborne were the only people who thought it was "a priority to fight for bigger bonuses".

'London headquarters'

He joked that bankers were facing a squeeze on their living standards and suggested that Mr Cameron was "straining every muscle" to help them.

"This the man who, in opposition, said there would be a day of reckoning for the banks," he said. "And now he now sends his chancellor to fight against the bonus cap in Brussels."

He suggested that Conservative Members of the European Parliament were in favour of the EU package.

But Mr Cameron replied that total bonuses were down a quarter since the coalition government came to power in 2010 and the UK had some of the "toughest rules" on bonuses and transparency.

He said supporting the City was in the national interest, as the UK accounted for 40% of all financial services business in the EU and he turned on Labour's record on bank regulation in government.

"We want to make sure that international banks go on being headquartered in the UK," he said. "We think that matters. He may want to pose and play politics but we care about these things."

Mr Cameron added: "I will take lots of lectures from lots of people but I don't have to listen to the croupier in the casino when it all went bust."

EU finance ministers have vowed to press on with the capping proposals, despite warnings that it could force banks to relocate to the US or Asia.

Speaking on Wednesday, the Mayor of London Boris Johnson said he hoped Brussels would reconsider the move. "What I have tried to say, time and time again, is that this will not so much damage London as damage the whole of Europe."

Such policies made it "ever more difficult" to persuade people of the benefits of remaining within the EU, he added.

Subsidy or tax

At Prime Minister's Questions, Mr Miliband also accused the prime minister of "not knowing his own policy" on curbs on housing benefit for spare rooms in rented social housing.

He said the hardship fund to help cover the "bedroom tax" had an allocation of £25m for disabled people - but the figures showed £306m would be taken away by the alterations to benefits.

Individuals faced losing £700 a year as a result of the changes, he argued.

But Mr Cameron, who insisted that cutting the "spare room subsidy" was not a tax, said support for disabled people was not being cut.

Payments to the disabled - in the form of the Disability Living Allowance - had gone up from £12.4bn in 2009/10 and by 2015 it would be £13.3bn.

He told Mr Miliband he had received a letter from a pensioner who thought they would be hit by the change as a result of being "terrified" by the Labour leader's "completely irresponsible" actions.

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