M&S chief defies MPs’ call for three-year pay freeze

As Left-wingers wade into dispute Rowe insists he won’t back down

NEW Marks & Spencer chief executive Steve Rowe was last night standing firm against demands by Labour MPs that he accept a pay freeze for three years.

The MPs have waded into a staff pay row at the retailer via a letter and targeted Rowe’s own salary as part of their campaign.

However, in a written reply seen by The Mail on Sunday, Rowe said he and other executive directors had already agreed not to take a pay rise next year, but offered no further freeze.

He also rejected the MPs’ call for the board to reconsider staff pay changes, saying ‘the vast majority’ would be better off. And he argued that M&S customer assistants will be paid more than the recently introduced National Living Wage and that from April next year M&S staff would be ‘amongst the highest paid in UK retail’.

Interventions by MPs on pay at companies are on the rise amid claims that firms are cutting back on benefits to help fund the higher National Living Wage announced last year.

Their letter was organised by Siobhain McDonagh, MP for Mitcham and Morden. Backers included Labour leadership candidate Owen Smith, former contender Liz Kendall and former Shadow Chancellor Alan Johnson. It followed a petition of 90,000 signatories against the pay changes.

M&S says its proposals will see big rises in basic pay, but will scrap premium pay for Sundays, introduce a standard payment for Bank Holiday working and reduce pension contributions. But after a lengthy consultation M&S has agreed top-up payments to compensate those who might lose out.

Rowe told the MPs in his letter: ‘For those who would see a reduction in total pay as a result... topup payments will ensure nobody is worse off in the first two years.’ He added that further top-up payments would be made from 2019 onwards.

Rowe took over as chief executive in April with a salary of £810,000. He also received £1.4million in benefits and bonuses over the past two years. Replacing the outgoing Marc Bolland, Rowe is spearheading a turnaround plan at M&S in an effort to revive struggling clothing sales. City analysts welcomed his plans to lower everyday prices and his focus on ‘cherishing’ the company’s core customer, who he dubbed ‘Mrs M&S’. However, he has warned that his plans will hit profits in the short term, but will deliver long-term gains.

McDonagh said 3,500 long-serving staff would lose out on pay under the new terms, while the pension arrangements of 11,000 will also be affected.

She said she would write back to Rowe and ask him to meet the 71 concerned MPs at the House of Commons. She said the staff affected by the new pay terms were ‘hard working, dedicated and are

very loyal to the brand’. She added: ‘Many have been with the company their entire working lives. It’s reasonable that they should expect the same conditions they signed up for.’

The company has been struggling to revive its clothing business, which has been shrinking for years. Former boss Marc Bolland spent £3.5billion on turnaround plans, but the City fears profits may not increase materially until at least 2020.

McDonagh said staff were ‘not responsible for the mixed fortunes of the ladieswear division. They feel very let down, particularly because Rowe, like them, has been at the company all his life and they feel he should understand.’

He has quickly taken a more radical stance than Bolland and last week also unveiled plans to cut 525 head office jobs and move 400 out of London.

The pay changes amount to an estimated £4million a year across 3,500 staff. Campaigners say this is painful for staff but less than 1 per cent of profits.