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12 Dec 2011 00:00
The British Deputy Prime Minister, Nick Clegg, has committed the government to a crackdown on excessive executive pay, saying austerity in the public sector had to be balanced by curbs on “irresponsible and unjustifiable” pay rises in the private sector.
The Liberal Democrats’ leader said ministers would publish firm proposals next month and the government was willing to legislate, if necessary, on measures that could include forcing firms to let workers sit on the remuneration committees setting pay rates for top executives.
“Just as we have been quite tough on unsustainable and unaffordable things in the public sector, we now need to get tough on irresponsible and unjustified behaviour in the top remuneration of executives in the private sector,” Clegg said.
With the bank bonus season looming, controversy about excessive executive pay is likely to continue. A media report recently claimed that the Royal Bank of Scotland, which is 83% owned by the taxpayer, was expected to pay £500-million in bonuses to its investment bankers.
Another newspaper said about 24 100 staff at Barclays Capital were due to receive pay and bonuses worth an average of £210 000.
Clegg said he was not opposed to people being paid well, provided that they succeeded in their jobs.
“What I abhor are people who get paid bucketloads of cash in difficult times for failing.”
In September, at the Liberal Democrat conference, British business secretary Vince Cable announced two consultations covering executive pay.
Firstly, shareholders could be encouraged to take a more active role in restraining pay. Secondly, firms could be forced to put workers on remuneration committees and, thirdly, firms could be forced to publish information about the gap between the average earnings and the top earnings in their companies.
Clegg said the government agreed with many of the recommendations from the high-pay commission, the body set up by the left-wing pressure group Compass that published a report on this subject last month.
He was outraged by a recent report that said the pay of directors working for FTSE 100 companies had climbed by 49%. He said they were getting the extra money even though their companies were not doing any better and that this was “a real slap in the face for millions of people in this country who are struggling to make ends meet”.—
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