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17 August 2009

Call for government to curb excessive pay

Vince Cable and Frank Field back Compass campaign for a high pay commission

By Staff Blogger

A campaign to create a high pay commission to curb excessive salaries and bonuses has attracted the support of a hundred public figures.

The Liberal Democrats’ Treasury Spokesman, Vince Cable, and the Labour MPs Jon Cruddas and Frank Field are among the supporters of the campaign led by the left-wing campaign group Compass.

The group advocates measures including maximum pay ratios and bonus taxation to prevent widening income inequality.

The proposed body would mirror the Low Pay Commission, created in 1997, which advised on the introduction of the minimum wage.

In a statement Compass said that the “unjust rewards” of a few hundred “masters of the universe” had helped trigger the financial crisis.

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It also pointed to research that shows an employee working a 40-hour week on the minimum wage would have to work for around 226 years to receive the same annual pay as a FTSE 100 boss.

The statement said: “Remuneration and performance pay cycles are too short; rewards for failure are too great, to the detriment of the long-term future of these companies and the wider economy.

“The government must now take decisive action on excessive pay at the top when it has had such a damaging and corrosive effect on the real economy and wider society.”

It added: “We need a High Pay Commission to launch a wide-ranging review of pay at the top. It should consider proposals to restrict excessive remuneration such as maximum wage ratios and bonus taxation to provide the just society and sustainable economy we all want.”

Supporting the campaign, Cable said: “There is no justification for massive pay and bonus awards in financial institutions, the most important of which are guaranteed or owned or have been rescued by the taxpayer”.

The Chancellor, Alistair Darling, has recently indicated that the government is prepared to intervene to curb excessive bonuses when they pose a “systemic” risk to the banking system.

“If we need to change the law and toughen things up, we can do that,” he said.

The shadow chancellor, George Osborne, has also indicated that a Conservative government would act to prevent “unacceptable” bonuses.

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