Launching an independent commission on high pay

By Zoe Gannon

On Tuesday two things happened (other than George Bush defending waterboarding). In the morning an independent commission into high pay was launched and in the afternoon Barclays announced an extra £1.5 billion for the pay and bonus pool to the £3 billion the bank accumulated halfway through the year. This may seem surprisingly large considering that just 6 days earlier on the 3^rd November, Lord Sassoon, a Treasury minister, informed us that the government’s work on city bonuses was successfully completed stating “The government has taken action to tackle unacceptable bonuses in the banking sector”. We are apparently to expect no more from them.

Just two years on from an economic crisis that has resulted in hardship for many and we are seeing a business as usual mentality in the city. The High Pay Commission provides the opportunity to understand the links between the economic crash and the short-term remuneration policies that are still in fashion in the financial sector as well as look at what is driving the significant increase in top pay in the private sector.

To mark the launch of the commission new polling was carried out looking at attitudes to high pay. Just 1% of people thought that a CEO of a FTSE 100 Company should be paid as much as they are at the moment – top directors enjoyed a 55% pay increase last year taking top bosses average earnings to £4.9m, according to Incomes Data Services. The vast majority thought they should be paid significantly less. Now this may come as no surprise but perhaps more interestingly only 9% or people had any idea just how much these people were paid.

The CEO of big companies, and highly paid individuals whether they are football stars or bankers argue that they are worth it, that they are paid the going rate, that their pay is justified for numerous reasons.

Over the coming year the commission will seek to investigate the real reasons behind this dramatic rise in pay at the top and look at policies that could mitigate or reduce this trend. The commission was established by Compass and supported by the Joseph Rowntree Charitable Trust. Now established it will run independently from both organisations. It is chaired by Deborah Hargreaves, previously the business editor of the Guardian and before that the business editor of the FT. She will be joined by a panel of five Commissioners from business, trade unions and academia.

As part of the project the commission has issued a call for evidence – to submit evidence or read the current submission visit the website or follow us on twitter.

Zoe Gannon is the Head of Research for the High Pay Commission.