Labour

Ed Miliband blogpost - Arms race in directors' pay

The arms race to the top in directors’ pay should not just be a cause of public anger.

It should be a cause of deep worry about the long-term future of the British economy.

Today’s figures show that whilst the returns to shareholders through share prices over the last year have been almost completely flat, the pay of those at the top of those firms has rocketed up by 49%.

But it is an inescapable conclusion that the pay of too many people at the top is running away from a rational reward for what they doing for their shareholders and for our country.

David Cameron can wring his hands about this but he merely confirms he is out of touch if he fails to act.

In my conference speech I spoke about ending a something-for-nothing culture, a fast-buck economy.

We need to re-establish the connection between wealth creation and reward. It is only by doing that will we have a responsible British economy focused on the long-term.

For a start, there should be proper transparency about the pay of top executives and an employee representative on the remuneration committees of major companies.

The failure to reward hard work, something for something values and contribution isn’t just creating an unfairness at the top, its creating a real unfairness for millions of hard working middle and low income families.

This is the very squeezed middle I have been talking about ever since I became Labour leader.

Does that mean that every single one of our leading business figures hasn’t earned those rewards? Of course not.  Clearly many will have done.

Executives  deserve to do well when  they are creating jobs and wealth – making  real contribution to our national economic interest.

At a time of global economy urgency and with a jobs and growth crisis here at home, Britain needs its wealth creators and growth producers more than ever. And as a country we need to be clear about the deal in our economy.

We need a better system than one which rewards unfairness. It needs to change.

We need an economy based on values of hard-work and something for something.

My conference speech caused quite a stir – and it was intended to do so. Some people said it was wrong to talk about values when it comes to profits and wages and pay – that the market, however it works, is always right.

Others said it was simply too hard to identify what the rules should be so that we encourage hard work and real wealth creation and discourage people from seeking  to make a fast buck through predatory business practices which do not contribute to the long-term health of our economy.

But today’s figures, on the increase in executive pay in many of our leading companies show I was right to talk about these issues.

And I think that for all of us who believe in a responsible economy in Britain, they should be the spur to a wider debate.