17th May 2011
The high pay commission was set up last November to examine the pay of those at the top of the public and private sectors. Its interim report "More For Less: what has happened to pay at the top and does it matter?" is an extensive audit of the current debate on top pay.
It reveals the dramatic growth in pay experienced by those at the top of the income distribution over the last 30 years and discusses the causes of this growth. The commission's final report is due in November.
According to the interim report unless action is taken to curb executive pay, wage disparity between the UK's top earners and the rest of the population will continue to grow.
It suggests that if current trends continue, the top 0.1% of UK earners will see their pay rise from 5% to an estimated 14% of national income by 2030.
Meanwhile a new ICM poll shows that 72% of the public think high pay makes Britain a grossly unequal place to live. 73% say they have no faith in government or business to tackle excessive pay.
The poll shows that, from a range of options, the majority of the public (57%) wants top pay linked clearly to company performance, while half (50%) want shareholders to have a direct say on senior pay and bonus packages.
Chair of the high pay commission Deborah Hargreaves said: "This is the clearest evidence so far that the gap between pay of the general public and the corporate elite is widening rapidly and is out of control. Set against the tough spending measures and mixed company performance, we have to ask ourselves whether we are paying more and getting less."
In 2010, the average annual salary of FTSE 100 chief executives was more than £3,747,000, 145 times greater than the average wage of £25,800. Executive pay dipped slightly during the recession, but the report predicts that by 2020 the ratio will have spiralled up to 214:1.
Robert Talbut, commissioner, and chief investment officer of Royal London Asset Management, said: "As the polling shows there is a clear public interest in tackling top pay, and increasingly there is a clear business interest too. In part because companies depend on public support but also because the evermore complicated pay packages designed to incentivise performance for top executives – that have contributed to a ballooning in pay at the top – do not appear to have worked. The clear and necessary link between executive pay and company performance appear tenuous at best."
Nicola Smith, chief economist with the TUC, said that the report raised concerns about the wider workings of the economy: "Average pay growth was slowing before the recession, wages took a real hit during the recession and we're now seeing very slow wage growth coupled with high consumer inflation. There are real issues of fairness at a point when workers are facing the greatest squeeze in living standards for decades."
Depressingly, even among the wealthy there are those who believe that to have a few million in the bank is no longer enough to be considered rich.
Ken Eisold, Mindful Money's resident psychoanalyst, said the definition of what is rich has also changed.
He said: "Those with just a few million may well be right to think that if you want to find those who really deserve the term these days, you have to look much higher up the ladder of success"
The community from the Guardian think: DearDaveAndNick: "Pay gap widening, access to education increasingly dependent on wealth, fuel price and children living in poverty on the increase, the deserving and undeserving poor, yes I do recognise Victorian values – I'd say it's all going beautifully to Conservative plan wouldn't you gov'nor? Lost my job and Welfare seems a bit tight – buy some matches so we can eat tonight, won't you?"
While FredinSpain writes: The good old days return! Now where did we hear the clarion call for a return to victorian values before. Oh yes, the last time a Tory government was in power."
What do you think? Are we returning to Victorian values? Are our bosses, and head of industry paid too much? Have your say.
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