Labour outflanked the Government last night by announcing sweeping plans to curb excessive pay in the City of London and Britain's boardrooms.
Ed Miliband promised that a future Labour Government would implement in full a blueprint published by the independent High Pay Commission in November. It called for greater transparency, accountability and fairness to halt "stratospheric pay awards" for the top 0.1 per cent of earners that it said have created inequalities not seen since the Victorian era.
Its proposals include putting employees on remuneration committees; publishing the top 10 executive pay packages outside the boardroom; forcing companies to publish a pay ratio between the highest-paid executive and the median; forcing companies to reveal the total pay earned by executives; and setting up a permanent body to monitor high pay.
Labour's move is designed to trump David Cameron, who is expected to reveal the Government's plans to restrict high pay this weekend. Yesterday the Prime Minister said he was "not satisfied" with the level of bankers' bonuses, which were "completely out of whack". He added: "We've seen a level of reward at the top that has just not been commensurate with success."
Labour's intervention will put pressure on the Government to beef up its own plans. It may strengthen the hand of Nick Clegg, the Deputy Prime Minister, and Vince Cable, the Liberal Democrat Business Secretary, who wants to close down the "old boys' network" in which senior businessmen in effect set each other's pay by chairing remuneration committees at other companies.
In an interview in today's Guardian, Mr Miliband said: "Does anyone really believe that David Cameron came into politics to create a more responsible capitalism? The public are not going to buy it."
Defending himself against growing criticism of his leadership, Mr Miliband said: "We have taken the hard road, not the line of least resistance. I think it is a fight. I always knew it was going to be a fight. It is one I relish – I never expected it to be anything else."
Chuka Umunna, the shadow Business Secretary, said: "Excessive executive pay is bad for business because perverse incentives foster poor decision making, as we saw during the financial crash, and they divert resources away from long-term investment. Rewards for failure are bad for society because they undermine trust in the entire system." There is growing support among Conservative as well as Liberal Democrat MPs for a crackdown on "crony capitalism".