Lord Brooke of Alverthorpe
To ask Her Majesty’s Government whether they have plans to legislate to introduce secret ballots for all employees to ratify decisions made at a company’s annual general meeting on the remuneration of that company’s directors and its five most highly paid employees.
The Earl of Courtown (Con)
My Lords, the Government have no such plans. The remuneration of company directors is primarily a matter for the company and its shareholders. Comprehensive reforms to the reporting and governance of directors’ pay in 2013 have boosted transparency for shareholders and given them a binding vote on companies’ remuneration policies. All company directors must have regard to the interests of employees in discharging their legal duty to promote the success of the company.
Lord Brooke of Alverthorpe (Lab)
My Lords, my question starts, “Does the noble Baroness know?”. However, does the noble Earl know that the UK now has very high income inequality compared with most other developed countries? Further, does he know that, even with the coming living wage increases planned over the next few years, it is possible that the wage gap will still be the same by 2020 as it is now and as it was in 2010? Is it not time, after a decade of stagnation, that we had some thoughts about how we can try to bring about a narrowing of that gap? Will the Minister please go back—or at least give an indication that he will go back—and come forward with some ideas about how we will narrow it?
The Earl of Courtown
I thank the noble Lord for his question. He raised a number of points, including the national living wage, which is about to come into force. We must also remember that the national minimum wage has had one of the biggest increases in its history. We take into account all the matters that he raised. He referred also to employee engagement and how important that is in the workplace.
Lord Lea of Crondall (Lab)
My Lords, is the Minister aware that, at a time of fast economic growth for several decades, the ratio of remuneration from the top to the bottom in companies—as a member of the Royal Commission on the Distribution of Income and Wealth I remember the numbers going back to the start of the 20th century—came down from 100:1, to 90:1, to 80:1, to 70:1, winding up at 15:1 or something like that? Would he not agree with the Labour Party’s manifesto that there should at least be workers’ representatives on boards’ remuneration committees?
The Earl of Courtown
At least the noble Lord, Lord Lea of Crondall, has asked me a question that I can answer. The answer is, of course, no. My right honourable friend the Chancellor of Exchequer has been working throughout his period as Chancellor to reduce inequality.
The Earl of Courtown
My Lords, there is always more that can be done and we hope that, with the policies we have introduced, inequality will reduce.
Lord Robathan (Con)
My Lords, does my noble friend think that many people in the country agreed with that proposal in the Labour Party manifesto last May?
The Earl of Courtown
We all remember what happened at the general election in May. I, by the way, was in Kuala Lumpur at the time. I will not bore noble Lords with what I was doing there, but I do, of course, agree with my noble friend.
Lord Stevenson of Balmacara (Lab)
Let us get back to the Question. This raises important issues about transparency and equity. In 1980, to back up what my noble friend was saying, the median pay of directors of FTSE companies was £63,000 and the ratio to the average wage was 11:1. In 2013 that ratio had risen to 130:1 and median board pay is now £513,000. You have tried transparency, it does not work. What plans have the Government really got to regulate those who abuse their position by taking excessive pay and whose warped judgments prioritise short-term gains instead of long-term growth?
The Earl of Courtown
My Lords, regulation of pay throughout the banking sector, the high pay and the differences between all these subjects—I am sorry, I have lost track. Basically, it is important that there is equality in pay, and regulation of various sectors is so important in this area. I will write to the noble Lord. I apologise for that answer.
Lord Tyler (LD)
My Lords, in the interest of the transparency and effective democracy to which the Government constantly refer, will the noble Earl ensure that, in all private organisations, when it comes to the forthcoming discussions about party funding, no individuals will find themselves contributing to the funds of a political party they do not support?
Baroness McIntosh of Hudnall (Lab)
My Lords, in an earlier answer the Minister made a somewhat surprising statement to the effect that his right honourable friend the Chancellor had been working throughout his tenure to reduce inequality. Can he tell the House how things would have been different if he had not?
The Earl of Courtown
Inequality is reducing, my Lords. As I said earlier, we are working hard on the national minimum wage increases, which are the highest ever, and we have the national living wage coming in in April.
Lord Roberts of Llandudno (LD)
What conversations do the Government have with the Welsh Assembly? GDP in Wales is only 67% of that throughout the rest of the United Kingdom.
The Earl of Courtown
My Lords, I am glad that the noble Lord, Lord Roberts, mentioned the situation relating to Wales. There are always continuing relationships between the Assembly in Wales and the department here in London.
Lord Wallace of Saltaire (LD)
My Lords, given that fewer than one in four eligible voters voted for the Conservatives in the election, does the noble Earl have much confidence that the majority of voters also approved of the Conservative manifesto’s proposals?
The Earl of Courtown
My Lords, I did not quite catch the last bit but I caught the first bit. An awful lot more voted for the Conservatives than they did for the Liberal Democrats.