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Labour calls for 'responsible and better' capitalism | Labour calls for 'responsible and better' capitalism |
(40 minutes later) | |
Labour has called for "more responsible and better capitalism" and policies to tackle excessive executive pay. | Labour has called for "more responsible and better capitalism" and policies to tackle excessive executive pay. |
Shadow business secretary Chuka Umunna said increasing transparency was the key to addressing high salaries. | Shadow business secretary Chuka Umunna said increasing transparency was the key to addressing high salaries. |
His comments echo those of Labour leader Ed Miliband who has challenged David Cameron to match Labour's pledges on the issue. | |
The coalition is expected to announce its policies on executive pay later this weekend. | The coalition is expected to announce its policies on executive pay later this weekend. |
In an interview with the Guardian, Ed Miliband said: "If one of the big battlegrounds of British politics is going to be who is really going to take action on executive pay, I say 'bring it on'. I promise you they are not going to steal a march on us in this area. | |
"Does anyone really believe that David Cameron came into politics to create a more responsible capitalism? The public are not going to buy it." | |
Transparency | |
Speaking on BBC Radio 4's Today, Mr Umunna said excessive executive pay was "symptomatic" of the "kind capitalism that has grown up in this country over the last 30 years". | |
"What we need is a more responsible and better capitalism," he said. | "What we need is a more responsible and better capitalism," he said. |
Labour was not against people being rewarded for taking risks and creating jobs, he explained. | Labour was not against people being rewarded for taking risks and creating jobs, he explained. |
But there was a problem when pay awards appeared to "bear no relation to performance" - a situation that "undermines trust in the whole system", he said. | But there was a problem when pay awards appeared to "bear no relation to performance" - a situation that "undermines trust in the whole system", he said. |
Excessive executive pay is also "actually bad for business", he said, because perverse pay structures foster poor decision making - as seen during the financial crash of 2008. | Excessive executive pay is also "actually bad for business", he said, because perverse pay structures foster poor decision making - as seen during the financial crash of 2008. |
Labour says it accepts in full the recommendations the High Pay Commission and urged ministers to do the same. | Labour says it accepts in full the recommendations the High Pay Commission and urged ministers to do the same. |
The commission - set up by a pressure group - had said the disparity between what top executives and average workers earn has been building for many years. | The commission - set up by a pressure group - had said the disparity between what top executives and average workers earn has been building for many years. |
Mr Umunna said said there was no single measure that could be used to tackle high pay, but there was a "need to increase transparency". | Mr Umunna said said there was no single measure that could be used to tackle high pay, but there was a "need to increase transparency". |
"You need to simplify remuneration packages, so you've got one salary and one performance-related element," he said. | "You need to simplify remuneration packages, so you've got one salary and one performance-related element," he said. |
Companies should also publish a pay ratio between the highest paid executive and the company median average - and the government could publish a league table highlighting the biggest pay gaps, he suggested. | Companies should also publish a pay ratio between the highest paid executive and the company median average - and the government could publish a league table highlighting the biggest pay gaps, he suggested. |
Accountability | Accountability |
Accountability was another important element, and this could be tackled by putting an obligation on investors and pension fund managers to disclose how they vote on remuneration packages, he said. | Accountability was another important element, and this could be tackled by putting an obligation on investors and pension fund managers to disclose how they vote on remuneration packages, he said. |
Labour also wants a repeat of the bank bonus tax - to increase "fairness". | Labour also wants a repeat of the bank bonus tax - to increase "fairness". |
Deputy Prime Minister Nick Clegg said in December the government would announce new plans to "get tough" on excessive boardroom pay in January and may legislate if necessary. | Deputy Prime Minister Nick Clegg said in December the government would announce new plans to "get tough" on excessive boardroom pay in January and may legislate if necessary. |
The High Pay Commission was set up by pressure group Compass, with backing from the Joseph Rowntree Charitable Trust, to investigate boardroom pay. | The High Pay Commission was set up by pressure group Compass, with backing from the Joseph Rowntree Charitable Trust, to investigate boardroom pay. |
Its year-long inquiry found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years. | Its year-long inquiry found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years. |