Tuesday, March 20, 2012
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Fairer pay for all

"Average earnings in South Somerset  at £23,200 are below the national average of £25,900," writes David Heath CBE MP, commenting on pay inequality and his views on the report produced by the High Pay Commission on top executive earnings.

He continues: "And with the economic situation, life is pretty hard at the moment. What are we then to make of the report published this week by an independent organisation, the High Pay Commission, which reveals that top executives are paying themselves ever more, massively more,  despite poor performance by their companies

"The immediate response may well be “Well, it was always like that”, or “If they’re prepared to take the risks, good luck to them”. But both attitudes are wrong. It wasn’t always like that; in 1980, the boss of Barclays was paid just 13 times the average pay. Last year, John Varley received £4,365,636 – 169 times more than the average UK worker. The pay of the chief executive at now state-owned Lloyds Bank has increased by 3,141.6% to £2,572,000 over the same period – 75 times the average Lloyds employee. And these are not entrepreneurs. They haven’t risked their own money in setting up and running a business starting from scratch. They are paid employees of long established public companies.

"So how on earth can a rise in top executive pay of getting on for 5,000% in thirty years be justified in a period when average pay has barely increased threefold? The answer, surely, is that it can’t, and that there is something deeply wrong about a system of remuneration that allows that to happen. We did not need the Commission to reveal what has been obvious for some time, but we should be grateful they have set it out with stark clarity. That now adds to the evidence which has been brought forward in response to the consultation which my colleague Vince Cable set up in the autumn to look into the issue. And, hopefully, it will now result in action.

"A large part of the answer must lie in greater transparency. Top executives’ pay in public companies should be open to scrutiny and decision by the shareholders in a way which allows proper control to be kept. There is a strong argument for staff representatives on remuneration committees, which too often seem to be cabals of old friends in similar situations looking after each others’ interests. One of the extraordinary things about the current situation is that pay seem so often completely unrelated to the performance of the companies in question. Pay increases, especially to the stratospheric levels seen in many public companies, is therefore directly at odds with the interests of both shareholders  and consumers.

"As Deborah Hargreaves, the Chair of the Commission, says, “"The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society – the top 0.1% – continues to enjoy annual increases in pay awards”. It is offensive to everybody who is facing real difficulties or, at the very least, discomfort, as a result of an economic crisis not of their making that it should be so, and if Britain’s top companies are incapable of understanding that they, too, need to act responsibly then there may be a need to force them through statute to do so."

David in Parliament

TheyWorkForYou.com Search: speaker:David Heath
  • Points of Order (15 Mar 2012)
  • Traveller Sites (Dorset) (12 Mar 2012)
  • Traveller Sites (Dorset) (12 Mar 2012)
  • Oral Answers to Questions — Communities and Local Government: Localism Act 2011 (12 Mar 2012)
  • Oral Answers to Questions — Communities and Local Government: Localism Act 2011 (12 Mar 2012)

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