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Call for commission to curb pay Darling dismisses pay commission
(about 23 hours later)
One hundred public figures have joined a pressure group's campaign for a High Pay Commission to curb "excessive" pay. Chancellor Alistair Darling has come out against calls for a new commission to curb "excessive" pay.
Lib Dem Treasury spokesman Vince Cable and influential Labour MP Jon Cruddas are among politicians arguing such rewards led to the financial crisis. One hundred public figures joined a pressure group's campaign for a High Pay Commission, to act as a watchdog over high City salaries.
They are joined by unions and academics in supporting centre-left group Compass's campaign for measures such as maximum wage ratios and bonus taxation. The centre-left Compass group's campaign called for steps such as maximum wage ratios and bonus taxes.
Chancellor Alistair Darling has said he is ready to curb bonuses if necessary. Mr Darling said he was "not persuaded by that", but criticised the culture of huge bonuses at banks.
The group issued a joint statement which says the "unjust rewards" of a few hundred "masters of the universe" exacerbated the risks the British economy was exposed to. The campaign compared the wage levels of the highly-remunerated to those of employees who worked a 40-hour week earning the minimum wage.
Rewards 'too great'
It compared the wage levels of the highly remunerated to those of employees who worked a 40-hour week earning the minimum wage.
It argued someone earning the minimum wage would have to work for about 226 years to receive the same annual pay as a FTSE 100 boss.It argued someone earning the minimum wage would have to work for about 226 years to receive the same annual pay as a FTSE 100 boss.
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 Vince CableLib Dem Treasury spokesman 'Unjust rewards'
The statement continued: "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 campaign's backers include Liberal Democrat Treasury spokesman Vince Cable and Labour MP Jon Cruddas, who argue that high levels of pay and bonuses led to the financial crisis.
"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." The group urging for control over pay issued a joint statement, which said the "unjust rewards" of a few hundred "masters of the universe" exacerbated the risks to which the British economy was exposed.
In the same way the Low Pay Commission was set up in 1997 to advise on the minimum wage, a High Pay Commission was needed to introduce "a wide-ranging review" of pay at the top and bring in new measures to curb excessive remuneration, it said. But Mr Darling said it was not the government's role to interfere in wage negotiations.
It also called on the government to take the "moral lead" by setting reasonable pay structures within taxpayer-owned banks as well as public bodies. Cable on excessive pay bonuses
Response 'timid' "I do think that government has a role in trying to stop undesirable practices, such as excessive risk-taking through bonus payments in the banking system where we all stand to lose if that goes wrong," Mr Darling said.
Mr Cable has backed the Compass proposals. "But generally, I think that pay agreements ought to be reached by employers and employees meeting together."
"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," he said. The Conservatives were similarly unimpressed: "It is one thing ensuring city pay structures don't jeopardise the banking system - and quite another trying to reintroduce a prices and incomes policy across the economy," said shadow chancellor George Osborne.
Mr Cruddas said the government's response so far had appeared "timid". Public anger
"The Labour Party needs to reaffirm itself as the party of the many, not the few. It can start by supporting this initiative for a High Pay Commission," he said. The campaign said that in the same way that the Low Pay Commission was set up in 1997 to advise on the minimum wage, a High Pay Commission was needed to introduce "a wide-ranging review" of pay at the top and bring in new measures to curb excessive remuneration.
Brendan Barber, general secretary of the TUC, argued the growing gap between executive and employee pay had created "a new class of super-rich that float free from society". "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 campaign argued.
"The government can no longer afford to ignore this," he said. "A High Pay Commission that recognises the problem and looks to formulate concrete solutions would be a welcome initiative." "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," Mr Cable said.
On Sunday, the chancellor said the government was ready to intervene over excessive bonuses when they posed a "systemic risk" to the banking system. Concern over high bonuses is not new, but it has prompted anger in recent months, at a time when the global economy has been in recession.
He also told the Sunday Times that he understood public anger over the issue and if tougher legislation was required, ministers would act. Much of the fury has been directed towards the possibility that the same banks that played a crucial role in the financial crisis and received state aid will, in time, return to handing out large bonuses while workers in the general economy still suffer.
"If we need to change the law and toughen things up, we can do that," Mr Darling said. Media reports on Monday suggested Barclays was seeking to hire five JP Morgan bankers with bonus deals totalling £30m. JP Morgan declined to comment.
And on Saturday shadow chancellor George Osborne said that a Conservative government would also seek to stop the payment of large bonuses across the banking system. Separately, the Times said Barclays paid million of pounds to its head of Barclaycard, Anthony Jenkins, for a role that never came to fruition.
He told the Guardian that handing out big awards backed by state guarantees was "unacceptable", even for banks that were not part-owned by the taxpayer. Barclays declined to comment on both reports.
However, the British Bankers Association (BBA) has said pay rules are already "more stringent" in the UK than in any other country. Global issue
G20 leaders addressed the topic of bonuses and high pay at their meeting in London in April. One member nation, France, has been particularly vociferous on the topic.
Christine Lagarde, France's finance minister, told French radio on Monday: "What we need to collectively eradicate is this rat race - the race for bonuses."
The US House of Representatives has voted in favour of laws to prevent banks paying bonuses that encourage excessive risk-taking.
However, the British Bankers' Association has said pay rules are already "more stringent" in the UK than in any other country.