In his statement, Chuka Umunna said:
Labour is laying down the gauntlet to David Cameron to show that he is serious about curbing the excessive and unjustifiable pay increases in too many British boardrooms.
Labour supports the independent High Pay Commission recommendations. These are backed by many business leaders, as well as being in line with measures in place in the U.S., Germany and other countries to increase transparency and accountability in the boardroom and the City. It is far from clear the Tory-led Government will stand up to vested interests and the lobbyists and do the same here for shareholders, our economy and society in general.
We need responsibility at the top as well as at the bottom of society. While it is right that those who work hard, generate wealth and create jobs for our country are rewarded, where failure is rewarded or people award themselves huge pay rises that bear no relation to performance or what their companies can bear, trust is severely undermined. This is why reform is needed.
Labour’s three key tests which the Government must meet to show it is serious about excessive executive pay.
One salary, one bonus – pay awards have become increasingly complex and it has become difficult for shareholders to know the full value of remuneration packages so, to improve transparency for shareholders and the public, executives should be paid a basic salary with a single performance-related element where justified.
Publish what is paid – Labour has called for firms to publish the ratio of average salaries of employees to executive pay; further to the publication of the ratios we would require the Department of Business, Innovation and Skills to publish a league table of the highest ratios.
Put an employee representative on the remuneration committee of every company.
Empower pensioners and investors – to increase accountability, investors and pension fund managers should be required to disclose how they vote on remuneration decisions so pensioners and investors would easily be able to access information on where their monies are being used to finance big pay deals. The last Labour government legislated in the 2006 Companies Act for this to to happen but the Government has refused to bring it in to force.
Labour’s five point plan for growth and jobs already includes a proposal for another round of the bank bonus tax to pay for 100,000 jobs for our young people.