All in this together? Directors' pay up 49 per cent

FTSE 100 directors receive a 49 per cent pay increase, while average pay rises by 2 per cent.

While most workers endure below-inflation pay rises or no pay rise at all, it's business as usual in the boardroom. Income Data Services, which crunched the numbers, found that the average FTSE 100 executive director received a 49 per cent rise in the last financial year to bring their total remuneration to £2.7m. Over the same period, chief executive pay rose by 43.5 per cent to £3.8m. Conversely, average pay, excluding bonus payments, has risen by just 1.8 per cent in the last year, well below inflation, which stands at 5.2 per cent.

At a time when company share prices and profits have fallen, what explains such extravagant rewards? Pay is set by remuneration committees, who are supposedly bound to guard the shareholder interest. But in practice the committees are dominated by a closed circle of former managers, who can ignore shareholder votes. As Deborah Hargreaves, chair of the High Pay Commission, noted on the Today programme this morning: "remuneration committees on companies are often made up of other executives from other companies with an interest in keeping pay high."

So, to quote Lenin, what is to be done? Both the coalition and Labour have addressed the subject in recent months, a break with the New Labour era when soaring executive pay was viewed as an immutable law of gravity. Vince Cable, for instance, has promised to force remuneration committees to explain in annual company reports why pay is so out of line with performance, and to give shareholders a legal binding right to block excessive pay. Meanwhile, Ed Miliband has focused on the need to diversify membership of remuneration committees by ensuring that they include at least one employee.

But such long-term promises won't satisfy the populist demand to curb excessive pay. For now, the truth is that we're all in it together but some of us are more in it than others.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Sadiq Khan is probably London's new mayor - what will happen in a Tooting by-election?

There will be a by-election in the new mayor's south London seat.

At the time of writing, Sadiq Khan appears to have a fairly comfortable lead over Zac Goldsmith in the London mayoral election. Which means (at least) two (quite) interesting things are likely to happen: 1) Sadiq Khan is going to be mayor, and 2) there is going to be a by-election in Tooting.

Unlike the two parliamentary by-elections in Ogmore and Sheffield that Labour won at a canter last night, the south London seat of Tooting is a genuine marginal. The Conservatives have had designs on the seat since at least 2010, when the infamous ‘Tatler Tory’, Mark Clarke, was the party’s candidate. Last May, Khan narrowly increased his majority over the Tories, winning by almost 3,000 votes with a majority of 5.3 per cent. With high house prices pushing London professionals further out towards the suburbs, the seat is gentrifying, making Conservatives more positive about the prospect of taking the seat off Labour. No government has won a by-election from an opposition party since the Conservative Angela Rumbold won Mitcham and Morden from a Labour-SDP defector in June 1982. In a nice parallel, that seat borders Tooting.

Of course, the notion of a Tooting by-election will not come as a shock to local Conservatives, however much hope they invested in a Goldsmith mayoral victory. Unusually, the party’s candidate from the general election, Dan Watkins, an entrepreneur who has lived in the area for 15 years, has continued to campaign in the seat since his defeat, styling himself as the party’s “parliamentary spokesman for Tooting”. It would be a big surprise if Watkins is not re-anointed as the candidate for the by-election.

What of the Labour side? For some months, those on the party’s centre-left have worried with varying degrees of sincerity that Ken Livingstone may see the by-election as a route back into Parliament. Having spent the past two weeks muttering conspiratorially about the relationship between early 20th-Century German Jews and Adolf Hitler before having his Labour membership suspended, that possibility no longer exists.

Other names talked about include: Rex Osborn, leader of the Labour group on Wandsworth Council; Simon Hogg, who is Osborn’s deputy; Rosena Allin-Khan, an emergency medicine doctor who also deputises for Osborn; Will Martindale, who was Labour’s defeated candidate in Battersea last year; and Jayne Lim, who was shortlisted earlier in the year for the Sheffield Brightside selection and used to practise as a doctor at St George’s hospital in Tooting.

One thing that any new Labour MP would have to contend with is the boundary review reporting in 2018, which will reduce the number of London constituencies by 5. This means that a new Tooting MP could quickly find themselves pitched in a selection fight for a new constituency with their neighbours Siobhan McDonagh, who currently holds Mitcham and Morden, and/or Chuka Umunna, who is the MP for Streatham. 

According to the Sunday Times, Labour is planning to hold the by-election as quickly as possible, perhaps even before the EU referendum on June 23rd.

It's also worth noting that, as my colleague Anoosh Chakelian reported in March, George Galloway plans to stand as well.

Henry Zeffman writes about politics and is the winner of the Anthony Howard Award 2015.