Wednesday, 27 October 2010

And another thing... about high pay

I like Tom Harris's blog, and find myself agreeing with quite a lot of what he says. Not sure about this bit in his latest post tho:
3. I oppose a “High Pay Commission”.

And in government, so did the Labour Party, or at least our then (very sensible) Chancellor, Alistair Darling did. Holding an inquiry into the “evils” of high pay sends out the message that we think wealth is A Bad Thing. Get real, comrades: high pay isn’t the problem – low pay is.
There are several things wrong with this. First, there is no need to counterpose low and high pay - there can be problems with both and we can deal with both, in different ways.

Second, in an environment in which the head of the CBI and former chief exec of HSBC are saying that top pay is causing problems I don't think reviewing the issue via a commission sends out the message that wealth is a bad thing. In fact I'd argue the reverse, to not take action looks like a lack of understanding that there is a problem.

Thirdly, and most importantly, the Labour government actually did undertake some useful work in this area which is worth remembering. Aside from the bonus tax, Labour also initiated the Walker Review which in turn resulted in significant reforms to the pay arrangements of amongst the most hightly paid in the UK - people in the City. And this took place whilst Darling was in charge at HMT. In addition Labour had intended to toughen up shareholder oversight of executive pay, perhaps either through a vote on contracts, or making the existing vote binding. And, Lord Myners gave plenty of speeches indicating that he felt there was a market failure in respect of rewards for those at the top.

Going back a bit, Labour of course introduced the shareholder vote on remuneration reports in 2003, and improved the disclosure of exec pay - because of concerns that there was a problem with high pay!

All that a commission on high pay would do differently presumably would be to get experts to advise it. I'm not sure that it would reach hugely different conclusions to those Labour drew in power, or come out with ideas much different to those floated in the leadership election (like employee representation on rem committees, trailed by D Miliband).

To argue against a commission on the grounds that it sends out an anti-aspirtion/anti-wealth signal is, like, soooo pre-crisis.

1 comment:

james said...

Perhaps the best way of presenting it is as just a Pay Commission?