Workers 'should be given powers' to help curb pay of top executives

Employees would be represented on bodies to monitor bosses' salaries, inquiry recommends

A permanent body to investigate and report on levels of executive pay which have now reached "stratospheric" levels should be set up by the Government, an inquiry concluded today.

The High Pay Commission reveals that the pay of top executives has soared by more than 4,000 per cent in 30 years, undermining productivity and "damaging" trust in British business.

It recommends that a body should be established with access to Revenue & Customs data on pay to monitor trends at the top of the income distribution and report to ministers.

As The Independent reported yesterday, the Commission also calls for companies to be forced to publish details of the pay gap between top executives and their average employees. It also recommends that workers should be represented on remuneration committees.

The report was welcomed by the Government, who said the recommendations would feed into its own ongoing review of executive pay.

"Many of the options we are consulting on are reflected in the High Pay Commission's final report and we welcome their contribution to this important debate," said Vince Cable, the Business Secretary.

"There is widespread consensus, not just among the public but in the business community, that this is unacceptable and is undermining the credibility of our markets-based system. What I'm working towards is responsible capitalism where rewards are properly aligned with performance."

Labour also welcomed the report. "On each of these proposals, the High Pay Commission's report backs the approach which Labour has taken," said Chuka Umunna, the shadow Business Secretary.

The High Pay Commission's study detailed the pay of Barclays' former top executive John Varley who, the study said, earned £4,365,636 – 169 times more than the average worker in Britain today, and an increase of 4,899.4 per cent since 1980 when the top pay in Barclays was just 13 times the UK average.

The chief executive in Lloyds Bank has seen his pay increase by 3,141.6 per cent to £2,572,000 over the same period – 75 times the average Lloyds employee. In 1980 it was just 13.6 times that of the average Lloyds worker, said the report.

Average wages in the UK today are a "modest" £25,900 – up from £6,474 in 1980 – a three-fold increase.

The report showed that decisions to award huge pay packages are set by a "closed shop," shrouded in highly complex detail, effectively hidden from shareholders, staff and the public.

"Stratospheric increases in pay are damaging the UK economy – distorting markets, draining talent from key sectors and rewarding failure," the report said. "There appears to be little truth in the myth that pay must escalate to halt a talent drain in executives. The growing pay gap between the top 0.1 per cent and everyone else is increasing public disillusionment, damaging trust and fuelling the view that business leaders are in it for themselves."

A poll of more than 2,000 members of the public found that four out of five believed pay and bonuses for top executives were out of control.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before