Inquiry backs curbs on high pay

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, a British inquiry has concluded.

The High Pay Commission reveals the pay of top executives has soared by more than 4000 per cent in 30 years, undermining productivity and damaging trust in business.

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

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 be represented on remuneration committees.

The report was welcomed by the Government, which 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 commission's study detailed the pay of Barclays' former top executive John Varley, who earned £4,365,636 ($9,136,675) - 169 times more than the average worker in Britain today and an increase of 4899.4 per cent since 1980 when the top pay in Barclays was just 13 times the British average.

The Lloyds Bank chief executive had his pay increased by 3141.6 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 Britain today are a "modest" £25,900 - up from £6474 in 1980 - a three-fold increase.

The report showed that decisions to award huge pay packages were set by a "closed shop", shrouded in 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 2000 people found four out of five believed pay and bonuses for top executives were out of control.

- Independent

HUGE GAP
* Barclays boss is now paid 169 times more than the average British worker.
* In 1980 the top pay in Barclays was just 13 times the average.
* Commission wants pay gaps to be public and having workers on salary committees