May carries on Labour’s business pay crackdown

Prime Minister gets tough on ‘corporate greed’ but faces accusations of copying Miliband policy

THERESA MAY will this week announce an Ed Miliband-style crackdown on executive pay in a move that threatens to inflame tensions with big business.

The Prime Minister will on Tuesday reveal her long-awaited plans for improving corporate governance that will include empowering workers and shareholders.

No 10 sees the move as making good on a Tory leadership campaign pledge and addressing what ministers perceive as voter disillusionment with “corporate greed”. However, critics are likely to point out that the proposals are in some cases word-for-word replicas of Labour policies adopted before the last election.

The Green Paper will include proposals to:

Make companies put staff representatives on pay scrutiny committees;

Force firms to publish pay ratios between executives and employees;

Give shareholders the power to veto pay packages of business leaders in an annual binding vote.

The policies were floated this summer when Mrs May put tackling the excesses of boardroom pay at the heart of her economic reform agenda. Earlier this month, she hit out at company bosses who “game the system” and warned the “reputation of business as a whole is [being] undermined”.

There has been outcry at the behaviour of Sir Philip Green over the collapse of BHS, which affected 11,000 employees.

The Prime Minister has repeatedly denied the focus is “anti-business” and aides argue only with improvements can Britain’s “strong reputation” for corporate governance be maintained.

However, the similarity between Mrs May’s proposals, the full details of which have only today been revealed, and Mr Miliband’s old policies is striking. Labour’s 2015 election manifesto, derided as anti-business by the Tories, promised better worker input by “requiring employee representation on remuneration committees”.

Mrs May’s proposals will “consider whether employee representatives should have an advisory role on remuneration committees”.

Mr Miliband triggered a row with big business when in 2011 he called for companies to publish the ratio between the pay of their highest and their average earners.

Mrs May wants to “require companies to publish pay ratios that show the difference in earning between the CEO and average employee”.

The policy similarities could create tensions with Tory MPs who derided Mr Miliband’s “anti-business” agenda before the last election and tend to oppose government intervention in failing markets. The Prime Minister’s announcements are also likely to reignite a row with business leaders, some of

whom went public this week with concerns over the reforms. Andy Haldane, the Bank of England’s chief economist, was among corporate figures who rejected Mrs May’s proposals for binding shareholder votes on pay and the publication of salary ratios.

An interim report led by the Big Innovation Centre, an independent think tank, warned that publishing pay gaps could create misleading comparisons.

Defending Mrs May’s proposals, a Government source said last night: “Businesses are a pillar of our society, creating employment opportunities and contributing significantly to funding our country’s public services.

“Good governance helps companies take better decisions, for their own long-term benefit and the economy overall – ensuring public trust in British business and making sure the UK is the best place in the world to do business.”

A source close to Mr Miliband last night joked that the Prime Minister was “cherry-picking” his economic policies.

During David Cameron’s premiership, companies were made to put their pay policy – as opposed to specific pay packages – to their shareholders at least every three years.

Mrs May’s proposals will go out for consultation, with companies encouraged to give their views and make suggestions. The Prime Minister has already had to make clear that firms will not be forced to put workers on their boards after she appeared to back the change in the summer.

The proposals come at a time when there are already tensions between big business and No 10 over the priorities for Brexit. There are concerns that a focus on achieving tighter immigration controls in negotiations with the EU could lead to bigger trade barriers being put up by Brussels.