In August 2017, campaigning organisation 38 Degrees launched a petition calling on the Prime Minister to "stay tough on executive pay." It noted that during the June 2017 General Election, the Prime Minister said that she planned "to force [big businesses] to publish pay details and to give employees more of a say by having them on the board[s] of big businesses." However, 38 Degrees expressed concern that since the election, business leaders had been able to influence the Prime Minister on this issue.
The High Pay Centre publishes an annual review of the pay packages of the chief executives of the FTSE 100 – the 100 biggest companies on the London Stock Exchange. The most recent review found that the average pay package of these CEOs was £4.5 million a year and that on average they earned 132 times the average salary of a full-time UK worker. These figures have increased greatly since just 20 years ago: in 1998, for example, the average FTSE 100 CEO received £1 million, while the ratio of FTSE 100 CEO pay to the average pay of a full-time UK worker was 47:1.
I believe it is shocking that it would take a typical full-time worker over 130 years to earn the annual pay package of the average FTSE 100 chief executive. It cannot be right that in recent years wages at the top have continued to rise, while those of everyone else have stagnated.
As you are aware, the Prime Minister has previously promised to take action on this issue, including by making executive pay packages subject to strict annual shareholder votes, putting worker representatives on company boards and making businesses publish pay ratios. However, I believe the Government’s published plans fall short of these promises. It has abandoned the proposal for binding annual shareholder votes, for example, while plans for employee representation on company boards have been greatly watered down. I do not believe such superficial changes are enough to tackle extreme executive pay and stagnating wages for ordinary workers.
I believe we need to go further on this issue. At the June 2017 General Election I stood on a manifesto that committed to tackling pay inequality by introducing an excessive pay levy on companies with staff on very high pay. The manifesto also pledged to bring in a maximum pay ratio of 20:1 for the public sector and for companies bidding for public contracts. I can therefore assure you that I will continue to press for real action to ensure fairness in pay and an economy that works for all.