Fairness at Work and Power in Communities

Siobhain McDonagh Excerpts

Thursday 12th May 2022 Commons Chamber

[Paul Scully]

I will cover P&O a bit later in my speech, if the hon. Gentleman will bear with me. While we celebrate the flexibility of our workforce and the employers that do the right thing, clearly, there are egregious examples, such as P&O. We continue to address those through the work of the Insolvency Service and through the harbours Bill, which was announced in the Queen’s Speech.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Would the Minister extend the category of egregious employers to Asda, B&Q, Sainsbury’s, Marks and Spencer and British Gas, all of which have reduced the terms and conditions of their long-standing members of staff on the basis of just 90 days’ consultation? Is that any way to treat anybody?

[Paul Scully]

The hon. Lady has raised this issue on a number of occasions. She will have seen, not that long ago, my announcement that we are establishing a statutory code of practice that will allow a strengthening of the findings of tribunals on companies that are doing the wrong thing in terms of fire and rehire and going back on people’s contracts in the way that she describes. What we want to provide, and what we have, is a labour market that rightly bears down on unscrupulous employers, protects those keeping to good working practices, promotes more competition in UK markets to build a high-skilled, high-productivity, high-wage economy, and promotes competition and choice so consumers have confidence in markets and businesses can compete on a level playing field. Our labour market is ranked among the top 10 countries, according to the World Economic Forum’s global competitive index. We also have one of the best records on workers’ rights in the world. Despite the pandemic, the labour market is strong by historical standards, with close to record levels and rates across the board.

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[Dr Fox]

That is certainly something that we should look at. The passage and the Committee stage of the Levelling-up and Regeneration Bill are opportunities for Parliament to genuinely reform our planning laws to make them sensible for a 21st-century country. We must ensure that in that Bill, not only is our green belt protected, but the Government increase those protections. Once our green belt is gone, it is gone forever. I believe it is our duty to steward the green spaces in our land for future generations.

[Siobhain McDonagh]

Is the right hon. Member aware that there are large tracts of green belt close to outer London train stations that are not green and are not accessible and that, if developed, could lead to 1 million more homes precisely in the areas where people need them?

[Dr Fox]

We should be having far more housing built in our urban areas. One of the great hopes I have for this Bill is that we will see housing built closer to where people can go to work so that there is not so much pressure on the transport infrastructure. It has been our tendency in recent times to build commuter belts where people therefore have to travel into our cities. Getting mixed development in our cities, thereby regenerating them, would take a lot of pressure off the transport system.

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[Siobhain McDonagh (Mitcham and Morden) (Lab)]

For 30 years, Susie Dent from “Countdown” has admirably been the country’s dictionary and thesaurus expert. When searching for a missing word, there can be few more reliable sources and it was thanks to Susie that I recently discovered the word “snollygoster”: not a character from “Harry Potter”, but an unprincipled person in office motivated by personal rather than public gain. Imagine making it to Downing Street and then spending your time doing anything to clutch on to power, rather than using your privileged position to change the lives of others.

Out in the real world, families are desperately worried about the cost of living crisis and how they can possibly stretch their salary to the next payday. They turned on the news this week in the hope that help was on its way, but, Madam Deputy Speaker, it isn’t. It is the duty of a Government to find ways to help, such as by introducing a one-off windfall tax on the oil and gas producers that have unashamedly declared that they have more money than they know what to do with. Instead, the Prime Minister’s focus is on smearing his opponents, planting dead cat distractions and proposing policies designed not to solve problems but to sow division to make people point at this Chamber and say, “You are all the same.”

But this is no game. Around one in seven adults live in homes where people have skipped meals, reduced meal sizes or gone hungry. And that is before inflation rises even further and energy costs soar even higher in October. Far from the days of D:Ream, without intervention, things can only get worse.

As ever, I listened particularly closely to the housing announcements in the Queen’s Speech. They were surprisingly prominent, but, as always, the devil is in the detail. Despite the fact we have 1.15 million households on social housing waiting lists across our country, the Secretary of State announced yesterday—between his ridiculous impressions—that the Government’s manifesto commitment of 300,000 new homes a year has been scrapped. Fast forward 24 hours and No. 10 says that is not the case. So I ask the Minister to put on the record whether the target still stands.

A cynic might link any scrapping of the house building target with the scale of the Government’s failure on the issue: there were just 5,955 new social rent homes last year, one of the lowest on record. At that rate, it will take 192 years to house everyone on the waiting list. Where is the ambition? Where is the political will?

House building commitments aside, I was reassured finally to read of progress for social housing tenants who are living in disrepair and battling endless hurdles in their fight for a safe and habitable place to live. Last year, my constituent Kwajo Tweneboa bravely partnered with journalist Daniel Hewitt and ITV News, which reported on the appalling conditions in which Kwajo, his neighbours and thousands upon thousands of social housing tenants were living. I am extraordinarily grateful to all involved for their determined pursuit of progress.

As it stands, to make a complaint and see it through to its conclusion, a social housing tenant requires the patience of a saint, the tenacity of a five-star general, an endless amount of phone data, a laptop for emailing and a postgraduate degree in bureaucracy. It is a world regulated by an authority that does not even the power to inspect a property, or speak to a resident—all thanks to the coalition Government, who completely abolished the Audit Commission and the housing inspectorate in the bonfire of the quangos. A decade on, we all need to talk about reinventing the wheel. However, I am relieved that the Government have finally seen the error of their ways. A strengthened regulator does not build a single new home, but it is an important step in finally giving a voice to some of the most vulnerable people in our communities.

I turn to workers’ rights. Ministers promised 20 times to deliver an employment Bill to enhance workers’ rights, but there must have been a page missing in the Queen’s Speech because I could not find a word to turn that rhetoric into reality. Just weeks ago, the Government told us how shocked they were about what happened at P&O and how that must not happen again—but it will. The Bill’s omission is all the evidence needed to show the importance with which the Government consider the issue. Until the practice is banned once and for all, fire and rehire will continue to be the model template for the biggest organisations to restructure and save funds; it is completely naive to think otherwise. The next scandal is just around the corner and the absence of an employment Bill plants the responsibility clearly at the Government’s feet.

I close with one final word from Susie Dent’s dictionary: perendinate, which is the marking of time by continually putting something off until the day after tomorrow. The reality for all those in insecure work, desperately waiting on social housing lists or choosing between heating and eating is that they simply cannot wait that long.

Energy Price Cap: Residential Buildings with Communal Heating Systems

Siobhain McDonagh Excerpts

Wednesday 20th April 2022 Westminster Hall

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Thank you, Mr Pritchard. Anyone would say that I was garrulous after those comments.

I thank and congratulate my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier) on bringing forward this really important debate. For households across our country, the cost of living is soaring. We have seen the biggest tax hike since the 1940s, the largest drop in living standards since the 1950s, public sector net debt reaching the highest level since the 1960s, and real earnings growth facing the largest one-year drop since the 1970s. Rising inflation, a hike in national insurance, and rocketing energy costs are putting unprecedented pressure on the pockets of hard-working families in all our constituencies.

However, as we have heard, approximately 150,000 housing association residents have heating and hot water delivered to their home via a communal or district heating network, rather than an individual boiler. Their way of paying energy is not regarded as domestic but business use. When it comes to energy payments, some might call them non-doms—perhaps we had better not go there. The Ofgem price cap does not protect those residents, so housing associations face the prospect of either absorbing soaring energy costs or passing them on to tenants and leaseholders.

This issue was first raised with me by my constituent Mr Johnston at the beginning of the year. He was worried that the lack of price cap protection and the soaring costs of energy may mean that he and his neighbours at Sadler Close in Mitcham could face an up to tenfold increase. They currently pay an estimated cost, with leaseholders paying through service charges and tenants through their rent. Mr Johnston lives in a Clarion-owned housing block and, despite my recent criticism of Clarion, I was delighted and relieved to learn that it has a commodity-capped agreement in place with its energy provider for another two years, so tenants and leaseholders will experience little increase, if any, in their gas charges. I am, of course, concerned about what will happen in two years’ time.

Right now, however, other tenants in similar situations will not be as fortunate. On 16 February, I wrote to the chief executive of Notting Hill Genesis regarding the Meadows estate on Mitcham Common to seek clarity that my constituents in those blocks would not face the same issue. Given the urgency of the energy price rises, I had hoped for a speedy response but, unfortunately, two months later I am still awaiting a reply. Even if those tenants are fortunate, thousands of others will not be.

The problems of unregulated energy supply are threefold. First, the monopoly of supply means that customers in shared blocks may be locked into long-term contracts with no way of holding suppliers to account on quality or price. Secondly, there is a lack of transparency. Residents often do not know that their energy will be supplied by a heat network. I took it upon myself to share the Clarion information outlined earlier in my speech with my constituents, fearful that many of them may not be aware of the impact of energy costs on their income. Who would have thought that a letter saying that their energy prices would be the same for two years could be heralded as such brilliant news? Thirdly, higher ongoing operating costs caused by property developers trying to cut the up-front costs of installing a network may simply result in higher costs for customers.

Minister, we need to examine the cost increases faced by residents in shared blocks and consider who has been hit disproportionately. We need to look at the regulation of energy costs paid in this way and quickly, because the clock is ticking towards the next big price hike in October. Warm words will not ensure warm homes, and without action the problem will get worse very quickly.

[Mark Pritchard (in the Chair)]

Do we have any other takers?

UK Hydrogen Economy

Siobhain McDonagh Excerpts

Thursday 17th December 2020 Westminster Hall

[Christian Matheson]

I entirely agree with my right hon. Friend. Slightly off subject, in Cheshire we also have expertise in pharmaceuticals, and lost that to the south-east. We hear about levelling up, and I am sure that he and I will be pressing the Government to match their slogans with reality. I say that with a willingness to work with the Minister.

By the mid-2030s, HyNet could be capturing more than 25 million tonnes of CO₂ per annum, or two and a half times the target that the Government hope to achieve by 2030. Together with our production capability, that makes Cheshire and Warrington, and the wider Mersey region, a prime candidate to be one of the first low-carbon industrial clusters in the UK. There are also wider domestic applications for using the gas network. Hydrogen can be stored as a pressurised gas, ready for use in the pipes. Hon. Members have already referred to that. Cheshire also has the largest UK storage capacity for hydrogen, using the network of salt caverns that I have referred to. They have excellent geological properties and are one of the more cost-effective options, making them a preferred site for development.

My plea to the Minister and hon. Members is not to set up a beauty contest, playing off one region against another, when there is capacity, capability, expertise and desire across the UK. Five clusters are bidding for funding. For them all to get what they want and need, the funding pot, I am informed, would have to be increased by around £20 million to £30 million. The alternative is to exclude one of the clusters from the funding. That is why I mentioned the question of funding at the start.

I welcome what the Government have proposed, but it would not take much of an increase for everyone to get a piece of the action, so that the jigsaw that my friend the hon. Member for Waveney talked about is not missing a piece. We all know how frustrating that can be. This is a great opportunity for all of the UK, and I hope that the Minister will seize it.

[Siobhain McDonagh (in the Chair)]

Before I call the next Member, I should say that we have three more Back-Bench contributions. If people agree to stick to a limit of between five and six minutes, we will get to the wind-ups in good time.

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[Claudia Webbe (Leicester East) (Ind)]

It is a pleasure to serve under your chairmanship, Ms McDonagh, and I congratulate the hon. Member for Rother Valley (Alexander Stafford) on securing this important debate. Climate breakdown is not a distant threat; it is happening here and now. The World Meteorological Organisation found that the 20 warmest years on record have been in the past 22 years. Human-caused climate change has already been proven to increase the risk of floods and extreme rainfall, heatwaves and wildfires, with dire implications for humans, animals and the environment. It is true to say that without immediate Government intervention, the urgent action required to preserve a habitable planet will be too slow. This will cause unimaginable disruption and could cost millions of lives, most immediately and sharply in global south countries, which have contributed the least to climate change.

The coronavirus crisis has demonstrated that we are only as secure as the most vulnerable among us, and that rapid social and economic change really is possible. At this unprecedented moment, the Government must consider all possible interventions and regulations in order to phase out the extraction of fossil fuels and to transition to renewables as soon as scientifically possible. Hydrogen has a crucial role to play in this endeavour, as well as in providing much-needed jobs as we rebuild from the coronavirus crisis. A report released earlier this month by the Offshore Wind Industry Council suggested that the UK’s green hydrogen industry could generate £320 billion for the economy and sustain 120,000 jobs by 2050.

I was proud to be elected on a manifesto that pledged to trial and expand tidal energy and invest to reduce the cost of renewable and low-carbon hydrogen production. Significant amounts of energy are lost in using electricity to produce hydrogen and then in burning hydrogen to produce electricity. The cheapest and therefore most widely used hydrogen is made from reforming fossil fuels, which involves using energy to convert fossil fuels into hydrogen and CO₂. To make the process carbon neutral, that CO₂ must then be removed by carbon capture and storage.

The production of green hydrogen through electrolysis is currently much more expensive. I challenge the Minister and the Government to commit to and focus their investment on making this cleaner form of hydrogen cheaper and more widely accessible. Otherwise, we risk the same fossil fuel companies that have profited from the climate crisis continuing to dominate and possibly even hampering our move towards renewable.

It is particularly vital that we introduce a zero-carbon homes standard for all new homes as part of heat decarbonisation. We must urgently roll out technologies such as heat pumps, solar, hot water and hydrogen and invest in district heat networks, using waste heat—

[Siobhain McDonagh (in the Chair)]

Order. I am terribly sorry that I have to ask the hon. Lady to bring her remarks to a close. I apologise for that.

[Claudia Webbe]

Okay. The green industrial revolution on which I was elected would have upgraded almost all of the UK’s 27 million homes to the highest energy efficiency standards, reducing the average bills by £417 per household per year by 2030 and eliminating fuel poverty. That speaks to the fact that, in any green industrial revolution, it is vital that the protection of all workers and communities is guaranteed during the transition to renewable energies and a socially just economy. The climate crisis is clearly a class crisis and it must be the big polluters and corporate giants who bear the cost, not ordinary people.

[Siobhain McDonagh (in the Chair)]

Order. I thank the hon. Lady for her contribution. I do apologise. I call the spokesperson for the SNP.

Fuel Poverty and Energy Price Caps

Siobhain McDonagh Excerpts

Thursday 19th November 2020 Westminster Hall

[Kwasi Kwarteng]

Absolutely. I suggested that there was flexibility in the scheme. One of the reasons that there would be flexibility is that we are trying to increase the number of installers who have the trust mark accreditation, so that they can do the work. It is a good scheme, and it goes some way towards meeting the manifesto commitment mentioned with respect to the £9.2 billion. There is clearly more work to be done and I fully accept that, but we have made a start. It would be irresponsible to say that the Government are “indifferent” to the problem, as was suggested by the Business, Energy and Industrial Strategy Committee. We are not “indifferent” to this important issue, though there may be disagreements as to how best to tackle it. It would be wrong to suggest that we are “indifferent” to that critical and hugely important problem.

The energy price cap was mentioned, and that opens up a whole new avenue of debate. Clearly that has had a role in not only helping people in straitened circumstances, but in helping industry. It has meant that the industry can, overall, be more productive and efficient. That obviously has the effect of driving down costs and thereby driving down prices. We are committed to ensuring fair energy prices for consumers, and that is why we introduced the price cap on default energy tariffs in 2019. The hon. Member for Greenwich and Woolwich mentioned that it was part of the Labour manifesto many years ago before he even got into the House. I think it was in 2013—the election was in 2015. Clearly, however, there was an issue and the Government accepted that. We introduced the requisite legislation. It is extraordinary that we are being criticised for adopting the policy suggested by the Opposition with which we have, over time, agreed. That shows that the Government do listen to ideas, from whichever quarter those ideas may arise.

The default price cap today protects around 11 million consumers, and a further 4 million households are protected by the prepayment meter price cap from 2021 when that is introduced. It is a big intervention in the way the energy market works and shows that we have a non-ideological approach to the issue. It also shows the Government’s determination to support hard-pressed energy consumers.

In my concluding remarks, I will talk specifically about the covid-19 response. I and the Government are fully aware that the covid-19 pandemic poses unprecedented and unusual problems with respect to fuel poverty. I was struck by the suggestion from the hon. Member for Kilmarnock and Loudon that fuel bills had risen by 37% or maybe it was his colleague the hon. Member for Linlithgow and East Falkirk. I fully accept that it is a huge increase.

From the outset of the crisis the Government recognised that the covid-19 pandemic would have a huge impact on household incomes and would lead to more straitened circumstances. That is why the Department for Business, Energy and Industrial Strategy acted swiftly to secure an agreement with energy suppliers to support consumers impacted by coronavirus. In fact, one of the first calls that I made was to try to organise a response, and the suppliers understood the difficult circumstances that we were in. We managed to reach an agreement as early as March, which provided real support for those who needed help the most.

The energy companies have responded reasonably well. There is a broad understanding in the sector about the nature of the problems. We have done a huge amount. People talked about poverty in general, and the Government have spent unprecedented amounts to protect jobs and incomes. We have extended the coronavirus job retention scheme until the end of March, which has been welcomed across the country. We have also increased the third self-employed grant and provided an uplift to universal credit, which was mentioned. I am happy to say that we have responded to the concerns by providing an uplift to universal credit.

We have also increased the upfront guarantee of funding for the devolved Administrations from £14 billion to £16 billion on top of the spring Budget 2020 funding. Despite all of the support and the unprecedented level of intervention, it is a sad fact that many households will struggle with their energy bills this winter. We are absolutely focused on that and I speak to energy suppliers all the time about how best we can meet the challenges. From 15 December this year, new rules will require energy companies to identify self-disconnecting prepayment meter customers, people who are confronted often with the very harsh dilemma that was pointed out and choose to take themselves out of the prepayment meter scheme. We require energy companies to offer them support to stay on supply and to offer emergency and family-friendly hours and credit to all prepayment meter customers. That is a world where we are driving change to meet the very problem that the hon. Member for Linlithgow and East Falkirk so ably identified.

In the spirit of cross-party co-operation, I hope I have always extended a warm hand to Members to discuss the issues. We have had an excellent debate. Like the hon. Member for Linlithgow and East Falkirk, I regret the fact that more right hon. and hon. Members could not participate today, but I am sure the question will be revisited soon. I will be very happy to attend a further debate if that is what Members want and also to meet individual Members on a face-to-face basis to discuss these really important issues.

Question put and agreed to.

Resolved,

That this House has considered fuel poverty and energy price caps.

[Siobhain McDonagh (in the Chair)]

I will suspend the sitting until 3 pm.

Trade Union Access to Workplaces

Siobhain McDonagh Excerpts

Tuesday 4th June 2019 Westminster Hall

[Andrew Stephenson]

I will raise that matter with the Minister for Small Business, Consumers and Corporate Responsibility, and I am sure she will be more than happy to write to the hon. Gentleman with an answer.

In his speech on 15 May introducing his Bill, and again today, the hon. Member for Warrington South referred to strengthening collective bargaining in the workplace. In the UK, collective bargaining remains an important method whereby pay and other terms and conditions are set. The UK takes a voluntary approach to collective issues. Collective bargaining is largely a matter for individual employers, their employees and their trade unions. Most collective bargaining in this country takes place because employers have voluntarily agreed to recognise a trade union and bargain with it. The Government do not believe that they should be in the business of forcing employers or their workers to enter into collective bargaining arrangements if they do not wish to do so. Instead, we prefer a voluntary and democratic approach. However, where an employer refuses to recognise a trade union voluntarily, our legislation provides for a statutory recognition procedure.

In 2018-19, the Central Arbitration Committee received 56 trade union recognition applications. Of those, six were able to reach agreement without the need for a ballot, including that reached between the employer Babcock Mission Critical Services Onshore and Prospect. A total of 25 applications were withdrawn and, encouragingly, 13 of these were because the employers and unions were able to reach agreement voluntarily. The key point I wish to reiterate is that if a majority of workers in a workplace want to organise and be represented by a trade union, they have the right to secure trade union recognition for collective bargaining purposes.

The Government recognise the important role that trade unions play in the UK economy and society and, personally, I hope that that continues for many years to come. Individual workers have the right to join a union and take part in union activities. Unions, through their individual members and officials, effectively have the right to recruit and organise in the workplace. Unions are also free to seek collective bargaining agreements with employers. If necessary, they can obtain statutory trade union recognition as long as they can demonstrate majority support for union recognition in the workplace. Our legislation therefore does not need amending. It is well established, and has been backed by successive Governments. If workers and unions want collective bargaining in workplaces across the UK, they are free to organise to achieve that.

[Siobhain McDonagh (in the Chair)]

I apologise that we have until only 6 o’clock.

Oral Answers to Questions

Siobhain McDonagh Excerpts

Tuesday 30th April 2019 Commons Chamber

[Chris Skidmore]

I entirely agree, and I pay tribute to the UK nuclear decommissioning sector. As science Minister, I have seen the innovation that is being developed. I recently announced £93 million for a robotics for hazardous environments programme involving about seven universities across the UK, which are looking into how we can use robotics more effectively to help nuclear decommissioning. I am delighted that that is now being transferred to Fukushima in Japan. The Government are ensuring that scientific collaboration is international. We will publish an international research and innovation strategy shortly, and I shall welcome any opportunities, involving any countries, to continue that work.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

9. What recent representations his Department has received on proposed changes to employment contract terms and conditions in the supermarket sector.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

I regularly meet representatives of the supermarket sector, both individually and through the Retail Sector Council, to discuss a range of issues. One issue that the council has identified as a priority is employment. The Government have committed themselves to upgrading workers’ rights and protecting the most vulnerable workers in all sectors through the good work plan. That represents the biggest upgrade of workers’ rights for over 20 years.

[Siobhain McDonagh]

I apologise for arriving late, Mr Speaker. I am delighted to have the opportunity to ask the Minister to support Mrs A, who has worked for Asda for 30 years. Her take-home pay, and that of 3,000 other members of staff, will be cut because of changes in the pay structure masquerading as an hourly increase. Paid breaks will be reduced, the night shift will be changed, and bonuses will be slashed. Will the Minister join me in supporting Mrs A and ensuring that she keeps what she is earning now?

[Mr Speaker]

The hon. Lady was not late for her own question. Her principal responsibility is to be in her place to ask her question, and we are delighted to see her. She does not need to be too apologetic; in fact, she does not need to be apologetic at all.

FTSE 100 Company Pay Ratios

Siobhain McDonagh Excerpts

Wednesday 23rd January 2019 Westminster Hall

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I beg to move,

That this House has considered FTSE 100 company pay ratios.

It is a privilege to be under your chairship today, Mrs Moon. I have to be honest and open with the Chamber: I am guilty of trying to dumb down parliamentary proceedings; I attempted to call this debate “Fat Cat Friday”. However, the Table Office pointed out that that would not be correct in the circumstances. I wanted to call the debate that because by lunchtime on Friday 4 January, the UK’s top chief executives had earned more than their average employees would earn over the entire year. Those chief executives take home astronomical figures that are more like telephone numbers than salaries. Although the average employee has seen their salary remain stubbornly low, the pay packets of the FTSE 100 chief executive officers have risen by an average of 11% over the last year alone, soaring to a staggering average of £3.9 million per year. How can that be right, just or fair?

Let me emphasise right from the beginning that I have absolutely no qualms about those at the top being paid well; I appreciate the demands of running one of the UK’s biggest organisations. And I am not, at the moment, calling for a pay cap or a widespread cut to chief executives’ pay. I am calling for fairness—for the importance of the contribution of those at the bottom to be recognised in line with the contribution of those in the boardroom; and for organisations to determine the pay and reward schemes of all employees in one whole-company pay policy.

I will describe in more detail the pay ratios across the FTSE 100, and will consider the causes and consequences of such extreme differences in pay within organisations. Then I hope to detail the reality in some specific organisations, before considering the tangible steps that the Minister and this Government should take to combat such unfairness in the workplace.

Let us start with the FTSE 100. In advance of this debate, Will Turvill of The Mail on Sunday made a remarkable analysis of the pay ratio between FTSE 100 CEOs and the average wage of workers at their firms. Staggeringly, his results reveal that one FTSE 100 company, Melrose Industries, pays its chief executive a completely eye-watering 1,000 times more than the average wage of its employees. I appreciate that this is an extreme example, but few of the other 99 companies on the FTSE 100 index can consider themselves exempt from being similarly unjust.

Even among the FTSE 100, there is inconsistency and disparity. A FTSE 100 CEO is more likely to be called David or Steve than to be a woman or to come from an ethnic minority. What is more, the six female FTSE 100 chief executives earn just 54% of the salary of their 94 male colleagues. However, that is a debate for another day, because it is the FTSE 100 index as a whole that I will focus on today.

Back in the late 1990s, the pay of a FTSE 100 CEO was an extortionate 59 times higher than that of their average employee. If we fast-forward 20 years, it has sky-rocketed to being an eye-watering 145 times higher, and rising. Let that sink in: it means that it would take the median UK worker an extraordinary 137 years to earn a FTSE 100 CEO’s annual pay. Is a chief executive today working that much harder than they did just 20 years ago? The statistics suggest otherwise, as there is very little evidence that soaring CEO pay has incentivised or been the reward for better company performance, because the value of the FTSE 100 has changed little since the late 1990s. However, the pay of FTSE CEOs has increased by 300%. Meanwhile, two thirds of these top firms fail to pay the living wage.

Such mind-boggling figures are difficult to comprehend. To provide some perspective, a FTSE 100 CEO is paid an estimated 132 times more than a police officer, 140 times more than a teacher, 165 times more than a nurse, and an astronomical 312 times more than a carer. These indefensible ratios are a slap in the face for hard-working employees across our country who, at the very least, expect to take home a fair day’s pay for a fair day’s work.

Before this debate, the House of Commons digital engagement team kindly sought the views of the public on this matter. One person said that

“when their employees are working full time and not being able to afford proper accommodation, energy, food, transport or children, suddenly the difference in pay seems rather stark.”

Another person suggested that

“there should be a pay ratio, so if CEOs wish to continue enjoying these luxuries they must ensure that their lowest paid employees are earning a sufficient amount.”

I believe that the pay ratios that I am describing are utterly unacceptable, unjust and unfair. As the executive director of the Equality Trust, Dr Wanda Wyporska, says:

“A society that values its teachers, care workers and nurses at less than 1% of a FTSE CEO is beyond broken”.

Her view is a common one, with an Oxfam survey finding that 72% of people want to see the Government urgently addressing the income gap between rich and poor.

What is causing such extraordinary executive pay to continue soaring? Perhaps it is the fact that former or serving chief executives pack the remuneration committees that set pay levels at large companies; perhaps it is the decline in trade union membership; or, most likely, it is the inaction of the Government on ensuring that fairness is at the heart of the world of work.

These pay ratios stem not just from extortionate salaries, but from extraordinary incentive schemes that are increasingly reserved only for those in an organisation’s boardroom. I must be clear once again: I have no problem retaining incentive pay for executives. However, incentive schemes should be available to all staff on the same terms.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

I am sorry for stopping a good speech, but my hon. Friend mentioned incentives; these CEOs also have the incentive of awards, including CBEs. Paula Vennells of the Post Office got a CBE, as most of these fat cats do. They end up getting awards, OBEs, knighthoods and all the rest of it, while the workers are suffering. There are people at the Post Office who face difficulties because of Horizon, a new system that has come in. Good postmasters—good people who are loyal to their communities—have been taken to court, and some of them are now going back to court. Will these CEOs be stripped of their knighthoods and awards?

[Siobhain McDonagh]

I thank my hon. Friend for that intervention. I will consider the Post Office a little later in my speech.

Having such incentives for all staff seems like a common-sense way of providing sensible alignment between average workforce pay and executive pay. It is a straightforward, practical idea to have a whole-company pay policy. Let me describe in more detail the reality at specific organisations in the FTSE 100 to illustrate the inequality that grows in the absence of a whole-company pay policy. I will start with Persimmon, whose former boss, Jeff Fairburn, last year received, on the back of Help to Buy, £47 million, which is an extraordinary 882 times the average salary of his workers, before he lost his job. We all remember the backlash when Mr Fairburn was granted a £75 million bonus. In the heart of a housing crisis, do we really think that he should receive such a staggering sum, or should we have seen that money helping young couples who are looking to get on the housing ladder?

How about the owner of Ladbrokes, GVC, whose chief executive, Kenny Alexander, raked in pay that was a huge 484 times higher than the average pay of his workforce? And how about Tesco, whose CEO, Dave Lewis, received a £4.9 million pay packet, which is 303 times greater than the average pay of his employees? Is he working 303 times harder, longer, or better than them?

Then there is Sainsbury’s: a pillar of the Great British high street. Over 148 years, it has established a reputation as a leading retailer and a good company to work for, but its lack of a whole-company pay policy has led to the most disgraceful discrepancy in its staff salaries. Under the guise of an increase in basic pay, 9,000 loyal and long-standing Sainsbury’s staff are set to lose up to £3,000 a year from 2020. They will forgo their paid breaks, the night shift will be shortened, and their Sunday premium will be removed. While those shop floor staff will see their bonus scheme scrapped under these new contracts, CEO Mike Coupe takes home an eye-watering bonus of £427,000 as part of his £3.4 million pay packet, and although the salaries of those staff are crumbling, their bills, mortgages and rent are still the same at the end of each month. I wonder whether Sainsbury’s remuneration committee gave a moment’s thought to those staff when it signed off its executive bonuses. When the board and remuneration committee sit down to discuss what the pay package for Sainsbury’s CEO is going to be, they should also be deciding the pay and conditions for their lowest-paid staff. If they thought about those two things together, there would be a bit more modesty, a bit more honesty and a bit more embarrassment.

Such inconsistency and injustice has grown to become the norm throughout the FTSE 100 and across the high street, with treasured organisations such as Marks & Spencer and B&Q falling foul of the expectation of organisational fairness. The absence of a whole-company pay policy in such organisations has led to unjust disparities. It is at this point that I turn to the Royal Mail.

Of course, examples of those disparities can be found outside the FTSE 100, and I thank the Communication Workers Union for bringing the following example to my attention: since the Royal Mail was privatised by the coalition Government, the pay of its CEO has soared beyond recognition. Before privatisation, the total pay of the chief executive, excluding their golden hello, stood at just over £1 million, 50 times higher than the average wage in the organisation and 78 times higher than the lowest wage. Since privatisation, the chief executive’s salary has doubled; it is now 90 times higher than the average wage and an unjustifiable 123 times higher than the lowest wage. What would have been money for a public asset and its workers is being pocketed for private profit at the very top of the company.

As for Post Office Ltd, things started to change once it was decoupled from the Royal Mail. A postal assistant earns just 3% of the salary of the chief executive, who received a 7% pay rise last year. This is an organisation that is overseeing the privatisation of Crown post offices across the country and the potential transfer of hundreds of Post Office staff to WHSmith, rated by Which? as the worst retailer on the high street. I emphasise once again that I am not calling for a cut to, or a cap on, the chief executive’s salary; I am calling for consistency, parity and fairness across her organisation.

I am pleased to see the Minister here to respond to the debate. She may remember that we met last year to discuss exploitative pay in assignment contracts, which are thankfully about to be abolished, so she has shown that she is willing to listen. Let me assess the further steps that could be taken to bring fairness back to the world of work. In August 2017, the Prime Minister described the “excesses and irresponsibility” of some big business moguls as undermining confidence and damaging the social fabric of our country. If only she had followed those strong words with strong action!

Granted, new rules that will force all UK firms with 250 or more employees to start publishing their pay ratios should be warmly welcomed. However, those figures will be based on the median average of UK employees—that is, the salary of the employee halfway between the top of the scale and the bottom. A truer reflection would be to use the mean figure, taking into account the ratio of the lowest-paid employee compared with the highest. I ask the Minister how that policy will ensure that such extreme pay ratios do not occur in the first place, and what happens if and when they are shown to continue.

As the Chairwoman of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Leeds West (Rachel Reeves), says:

“If shareholders won’t or can’t hold these companies to account, then we will need Government to step in with tougher rules that clamp down on this kind of executive reward.”

Naming and shaming companies, and other piecemeal reforms that rely on organisations’ good will, have proven wholly ineffective. What is more, it is overwhelmingly clear that such excessive and unequal pay ratios are unpopular with the general public and reduce staff morale. The Mail on Sunday revealed this weekend that CYBG, the owner of Clydesdale bank and Yorkshire bank, faces a shareholder revolt at its annual general meeting over excessive bonuses for bosses.

However, we should not wait for isolated pushbacks. I suggest that the Minister takes note of the example of Sweden, ranked one of the happiest countries in the world, where companies with pay gaps face fines if they fail to close them. Furthermore, trade unions should have reasonable access to workplaces, and all FTSE 100 companies should strive to be accredited by the Living Wage Foundation. Most of all, I call for the important contribution of those at the bottom to be recognised in line with the contribution of those at the top, and for organisations to determine the pay and reward schemes of all their employees through one whole-company pay policy. If an incentive scheme is made available for some staff, it should be on offer for all within that organisation, on the same terms. Why should any organisation have a rule for just some employees, not a rule for all?

If a whole-company pay policy does not work, perhaps it is time to introduce a maximum pay ratio at those organisations. In an ideal world, I would not want society to be so prescriptive, but the worsening inequality I have described undermines our democracy, and I believe that our social democracy relies on fairness. It is based on the belief that people will behave reasonably, so when our democracy is not fair, the state must become involved. This is about more than just money, the economy and the world of work. Unfairness at these levels breeds cynicism—the feeling that the system just does not work for the ordinary person—and if that system does not work, why should a person trust in, vote in or participate in it? A lack of fairness produces spiralling disharmony and disaffection in society, and it is our duty as democrats to solve it.

The fact that it takes just three days for the UK’s top chief executives to earn more than the average employee is utterly shameful. After a hard day’s work, the very least that an employee deserves is to take home a fair wage that is in proportion to that of their colleagues. Across the FTSE 100, the absence of whole-company pay policies results in organisations rewarding the minority in the boardroom at the expense of the majority at the bottom. Enforcing or encouraging a whole-company pay policy in those organisations would be a sensible, logical and practical step towards ensuring that all hard-working employees receive a fair deal at work.

--- Later in debate ---

[Kelly Tolhurst]

I thank the hon. Lady for that clarification. However, I point out that a pay ratio of 20:1 could extend to foreign companies bidding for Government contracts, which would raise state aid and World Trade Organisation issues. There are issues with some of the policies and the refining that she may want to clarify further.

I thank again the hon. Member for Mitcham and Morden, who has taken the opportunity to bring this debate about company pay ratios to Westminster Hall. They are an important means of shedding light on pay distribution within companies and how that is changing over time. Their publication will spur companies and their remuneration committees to give greater thought and show more sensitivity to how pay in the boardroom aligns with employee pay. Along with other reforms implemented by the Government, they will ensure that the UK remains a world leader in corporate governance and an excellent place in which to work, invest and do business.

I have had many conversations with the hon. Lady, and I thank her for the way in which she approaches these matters. As I said yesterday in the Business, Energy and Industrial Strategy Committee, these issues will always be under review and we will always be looking at what can be done to improve transparency and clarity so that the spotlight can be shone on organisations. I look forward to working with the hon. Lady constructively on the number of issues that I know she is interested in in this area over the coming months.

[Siobhain McDonagh]

Can I ask for your clarification, Chair? Do I have a minute, or two, because we have not reached the time limit?

--- Later in debate ---

[Siobhain McDonagh]

That’s a very dangerous thing to say!

I thank all hon. Members for taking part in the debate. Although there are not huge numbers of us here, as a Back-Bench Opposition MP, the tools that I have to make small changes are sometimes about shame. The fact that we are here talking about this issue, that the House magazine has taken it up, and that Sainsbury’s has already sent me a very cross word about what was in the article, means that we are having some impact. As a Catholic, I completely understand the role of shame in controlling behaviour!

I come to these things as a patriot. I am the daughter of two people who came here in 1947, fleeing a small island that could not support them and could not feed their families. By dint of their own hard work and labour, they made a good life for themselves. I want that for everybody else. I believe that people should work hard. I believe that work is empowering—not just through someone supporting themselves and their family, but to the human spirit and purpose. I think it can be one of the best cures for mental health problems. To have something to do and to do a job well is a great feeling: I am grateful every day to do this job, because I love it and it leads me to do stuff. That is where I am coming from.

Like all Members here, I have an advice surgery every Friday. People come in and I look at their payslips and I think, “How do they live? How do they support their families and pay their rent? How do they get by?” I see that increasing, and I do not think that is what Britain should be about. We should be about reasonableness and fairness and giving people hope for a better future. I want work to pay, and for so many people who work so hard, who work such antisocial hours, in such poor conditions, that is not happening at the moment. Given where I come from politically, I never thought I would agree with pay ratios, but I am coming to the point of thinking that if other things cannot work, we may need to look at them.

Question put and agreed to.

Resolved,

That this House has considered FTSE 100 company pay ratios.

Good Work Plan

Siobhain McDonagh Excerpts

Monday 17th December 2018 Commons Chamber

[Greg Clark]

My hon. Friend speaks from great experience; he knows that the report and these reforms seek to capture the right balance. That includes making sure that the tourist industry, for example—which, to a certain extent, is seasonal—can operate in such a way that it is possible to take people into employment during times of peak demand, and so enable prospering during the year, while recognising that people have a legitimate reason for wanting to build a career in the hospitality sector and giving them the right to request a stable contract.

I want to remind the House of the emphasis that Matthew Taylor puts on good work, looking at how we can increase the level of skills and opportunities for advancement in work. That is an important part of the industrial strategy and of the reforms we are making. As well as the protections for workers, giving greater opportunity is very much the hallmark of this report.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I welcome this long overdue statement and, in particular, the ending of exploitative pay between assignment contracts. I congratulate, in a heartfelt way, Sally Bridge and all at the Communications Workers Union who have campaigned for so long for this. I also thank the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Rochester and Strood (Kelly Tolhurst), and indeed her predecessor, for meeting me about this matter.

But is this not a work in progress? Is there not so much further to go, given that important British employers now use the living wage to reduce people’s terms and conditions? These loopholes need to be ended, so that a fair day’s work gets a fair day’s pay.

[Greg Clark]

I completely agree with what the hon. Lady said at the end about her aspiration, and I am grateful for her endorsement of the reform. Of course, our vision for our economy is that we should see continually rising standards and opportunities for workers; that has been in our tradition and it is strategically in our interest as well. If we want to compete with other nations, that should be based on the quality and excellence of our work, rather than on a competition based on low standards. Now and in the future, we will look to build on these standards, but I am grateful that she recognises that this is a very important step forward today.

Economic Justice Commission

Siobhain McDonagh Excerpts

Tuesday 11th September 2018 Westminster Hall

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Thank you, Mr Hollobone; it is a pleasure to serve under your chairmanship. I reassure you that I will not talk for 10 minutes. I congratulate my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) on securing this particularly important debate and on his mind-blowing speech.

I welcome the final report of the Economic Justice Commission and, in particular, its recommendations on the reversal of this Government’s damaging decomposition of workers’ rights. This decade is forecast to be the weakest decade for average real earnings in 200 years. One in 10 workers is said to be in insecure work. Many of my constituents tell me of employers who impose restrictions, withdraw hours and refuse their workers rights, without their having the status of an employee in return. Meanwhile, there are almost 1 million people on zero-hours contracts, with the toxic combination of falling real wages, frozen benefits and insecure work resulting in 8 million people in working households living in 21st century poverty. Given this reality, it is heartening to read the report’s notable strong stance for workers’ rights, hard-wiring justice into our economic system as opposed to treating it as an afterthought.

Over recent weeks, I have seen at first hand the urgent need for many of the report’s workplace recommendations. I place on record my ownership of a single Sainsbury’s share—a golden ticket to attend its annual general meeting. This is an organisation that goes against recommendation after recommendation in the report. All Sainsbury’s shop floor staff are currently in the final stages of a consultation over new “sign or resign” contracts that will slash the salaries of 9,000 of its most longstanding and loyal members of staff. They will lose their paid breaks, their Sunday premium will be removed, the night shift will be shortened and their bonus scheme will go.

Some Members may argue that that is an unavoidable cost-cutting exercise for a key player in the struggling retail sector. Sainsbury’s argues that it is an exercise in fairness, to ensure that all colleagues doing the same role are paid the same. But I argue that the organisation simply shows no regard for its lowest paid staff. Although he scrapped the bonus scheme for shop floor staff, chief executive officer Mike Coupe has just taken home a £427,000 bonus as part of his £3.4 million pay packet—and we wonder why he sings about how he is “in the money”.

Many of those staff have shown decades of dedication to the organisation. While their salaries crumble, their bills, mortgages and rent at the end of each month remain the same. Take Paul, a 53-year-old staff member of 29 years who this week resigned from his role upon facing a £1,300-a-year pay cut. He describes himself as angry and upset that his loyalty has been sacrificed for the company’s profits. We met the Minister last week to discuss Sainsbury’s and the wider issues with such “sign or be sacked” contracts.

I have no qualms about those at the top being well paid, but I call for consistency, fairness and parity, and for the importance of the contribution of those at the top to be recognised in tandem with that of those at the bottom. As the IPPR report states, remuneration committees should contain elected worker representatives who decide the pay, incentives and conditions of all company staff in one whole-company pay policy. It would be really hard for people to agree to a £500,000 bonus for the chief executive officer if they knew that would mean cutting the take-home pay of the people at the bottom.

The need for such a policy becomes all the clearer when we consider exploitative “pay between assignment” contracts. In theory, such contracts are a sensible proposal, under which agency workers are guaranteed a basic level of pay between assignments and while they are out of work. However, in reality, workers are often kept on those lower paid contracts even when they are in the same job for years on end with no such gap between assignments. Such exploitative contracts can and must be prohibited, and I would be grateful if the Minister addressed the recent consultation on ending them. I congratulate BT and the Communication Workers Union on working together to end them in the near future, which will lead to an increase in the take-home pay of 1,200 call centre staff. I would also be grateful if the Minister told us what the Government’s response is likely to be to the recommendations of the Taylor report on work and the gig economy.

The Economic Justice Commission proposes putting fairness at the heart of the economy, because that would make it perform better and improve the lives of millions of people. Who would have thought it?

Whole Company Pay Policy

Siobhain McDonagh Excerpts

Monday 16th July 2018 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I start by placing on the record the fact that as of last month I am the owner of a single share in Sainsbury’s. It was my golden ticket to attending its annual general meeting earlier this week—but more about that parallel universe experience later in my speech.

First, I turn to fat cat Thursday. By lunchtime on Thursday 4 January, the top chief executives in the UK had earned more than their average employees would over the course of the entire year. The chief executives of FTSE 100 companies earn an eye-watering £898 per hour, which results in astronomical figures more like telephone numbers than salaries. I have no qualms about those at the top being paid well. I am not calling for a salary cap or a widespread cut to chief executives’ pay. My call is far simpler: for consistency, parity and fairness, for the importance of the contribution of those at the bottom being recognised in tandem with the contribution of those at the top. Put simply, I am calling for organisations to determine the pay and reward schemes of all their employees in one whole company pay policy.

I would like to discuss the common themes of pay ratios, remuneration committees and the living wage—the most wonderful of ideas that is disappointingly littered with loopholes. I would also like to bring to the attention of the House and the Minister an organisation that, in my opinion, epitomises all that is wrong when a company does not have a whole company pay policy. But let us start with pay ratios.

In 2002, the pay of a FTSE 100 CEO was an extortionate 79 times that of their average employee. Fast forward 16 years to 2018, and it has sky rocketed to 150 times. Let me put that into perspective. These are chief executives who are paid an estimated 132 times more than a police officer, 140 times more than a teacher, 165 times more than a nurse, and an astronomical 312 times more than a care worker. I am in no position to prescribe the highest acceptable pay ratio, but there can surely be no doubt in anyone‘s mind that those ratios are unacceptable, unjust and unfair.

Of course, there have been some developments in public policy. From 1 July 2019, companies with more than 250 employees will be obliged to reveal and justify their pay ratios. That can only be a good thing, because it will directly pressure the companies with the most extreme pay ratios to explain and to change them.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for raising such an important issue, at a very late hour. Does she agree that, while raising pay scales sounds good, the fact that people are no longer paid for breaks, and the fact that other bonus schemes no longer operate, means less in the pockets of workers? Does she agree that such contracts should no longer be forced on any existing staff, at Sainsbury’s or, indeed, anywhere else?

[Siobhain McDonagh]

I completely agree. The downside of the living wage is that companies have often sought to recoup some of their funds by reducing the conditions of long-standing members of staff.

Can the Minister explain how the Government intend to determine correctly the pay ratios of companies that outsource their low-paid roles to look more equal than they actually are and what mechanisms the Government intend to introduce to ensure that such extreme ratios do not occur in the first place? May I suggest that he note the example of Sweden—which, incidentally, is ranked one of the happiest countries in the world— where companies with big pay gaps face fines if they fail to close them?

It is not just extortionate salaries that generate these unjust pay ratios, but extraordinary incentive schemes, often reserved for those who sit at the very top of organisations. The Companies Act 2006 made it clear that non-executive board members were responsible for all stakeholders, rather than just for shareholders, and that, of course, includes all staff. However, it is still commonplace for many organisations to fail to recognise that company performance is based on the contribution of all staff, not just those at the very top. I have no problem with the retention of incentive pay for executives, but such incentive schemes should be available to all staff on the same terms. Why should any organisation have a rule for some employees that is not a rule for all?

In December 2017, the Financial Reporting Council produced its proposed revisions of the UK corporate governance code, requiring remuneration committees to

“oversee remuneration and workforce policies and practices, taking these into account when setting the policy for director remuneration.”

That seems to me to be a common-sense way of providing sensible alignment between workforce and executive pay. It is a straightforward, practical, whole company pay policy.

The need for such a policy becomes all the clearer when we consider exploitative “pay between assignment” contracts. The theory behind such contracts is a guarantee of a basic level of pay when an agency worker is between assignments and thus out of work, but, in reality, staff are often kept on the contracts even when they have been working in the same job for years without such a gap “between assignments”. Let us take, for example, an Argos distribution centre where agency staff earn £7.50 an hour, while core staff can earn up to £11.86 per hour—63% more than their agency counterparts—despite performing exactly the same role with the same responsibilities and despite having worked at the organisation for the same length of time. Repealing these contracts has been continuously recommended by parliamentary Committees and even the Taylor report. I understand that the Government are currently deciding whether to subject these contracts to greater enforcement, but I completely agree with the Communication Workers Union that the need instead is for these contracts to be abolished once and for all.

Then there is the issue of the national living wage, referred to by the hon. Member for Strangford (Jim Shannon). In theory it is an excellent idea, but in practice it is a deceptive tool used by some of the biggest organisations to cut terms, conditions and salaries. When it was introduced, former Chancellor George Osborne declared that Britain would get a pay rise. The infuriating reality is that a huge number of high-profile organisations have instead used its introduction to save funds by negatively impacting their most long-standing staff—their basic salary goes up, but to the detriment of the rest of their working conditions. These organisations should be named and shamed: I am referring to the likes of Marks & Spencer, B&Q, Zizzi, Ginsters, Le Pain Quotidien, Caffè Nero and countless others that have sought legislative loopholes against the spirit of the law.

Put simply, there should be more fairness. If someone is promised a pay rise, they should receive a pay rise. Organisations can dress it up however they like, but we, as politicians of all parties, need to call it out. That is exactly what I am doing today.

I have called this debate because I believe I have found an organisation that epitomises all the problems I have described so far, and more. Since 1869, Sainsbury’s has been a pillar of the great British high street. Over 148 years, it has established a reputation as a leading retailer that looks after, and out for, its colleagues and customers. But the organisation’s lack of a whole company pay policy has led to the most disgraceful discrepancies, whereby new contracts will see thousands of shop-floor staff have their salaries slashed while senior staff take home bonuses worth hundreds of thousands of pounds. If shop-floor staff do not sign these unscrupulous new contracts, they will be forced to resign. Here is the reality: 9,000 loyal and long-standing Sainsbury’s staff will see their wages fall by up to £3,000 per year by 2020. They will lose their paid breaks; their Sunday premium pay will be removed; the nightshift will be shortened; and their bonus scheme will go.

Some might argue that this is an unavoidable cost-cutting exercise for a key player in the struggling retail sector. Sainsbury’s itself argues that it is an exercise in fairness, ensuring that all colleagues doing the same role are paid the same. But I would argue that this is an organisation crying out for a whole company pay policy owing to those at the top being treated independently from those at the bottom. Either that, or I have misunderstood the definition of fairness, because while Sainsbury’s has scrapped the bonus scheme for its shop-floor staff, it has, astonishingly, awarded an eye-watering bonus of £427,000 to CEO Mike Coupe as part of his £3.4 million pay packet. No wonder he sings “We’re in the money.”

But this is no laughing matter. Many of these 9,000 staff have given decades of dedication to this organisation and tell me that they simply cannot afford to continue working there. While their salaries crumble, their bills, their mortgages and their rent are all still the same at the end of each month. I wonder if Sainsbury’s remuneration committee gave even a moment’s thought to these staff when they signed off their executive bonuses. Losing up to £3,000 per year might not seem like much to Mr Coupe when his pay packet equates to his taking home over three times that amount every single day, but for the thousands of staff losing out and their families every penny really does count.

I have done all I possibly can to raise the case of these staff with the Sainsbury’s board, which I expected, at the very least, to show some regret at the despair it is causing. Mr Deputy Speaker, I will let you be the judge of how regretful they are. Take the meeting I had with Rebecca Reilly, group head of communications, and Simon Roberts, retail and operations director, where I was astonished to hear the most long-standing colleagues who are losing thousands of pounds a year described as “anomalies”. Or take chief executive officer Mike Coupe, who, after his recent bruising session with the Business, Energy and Industrial Strategy Committee, refused to speak to me and raced away down the Portcullis House corridor. Or take the chaotic scenes at Sainsbury’s annual general meeting where, I am bewildered to report, my every move was followed by two senior Sainsbury’s staff.

After the meeting, I decided to use the opportunity to speak directly to the board members. This was their chance to justify their decision to me in person. Can you imagine how furious I was to see them hurried out of the room as I approached, surrounded by colleagues acting like bodyguards? I do not think I am scary, and I certainly do not think I am significant, but Sainsbury’s shop floor staff are significant and Sainsbury’s should be absolutely ashamed of the disgraceful disloyalty that they are showing these staff. Take Michelle, who has worked at Sainsbury’s for more than 20 years and stands to lose over £1,000 a year. She says that she has always loved her job, worked with amazing colleagues and been a proud and loyal employee for a good employer. That is why she found it so hard to speak out. Her petition on change.org has now been signed by 125,000 colleagues and customers from across the country.

Or take Mr and Mr Wilson, who have given over three decades of service to Sainsbury’s between them and yet anticipate that they will lose almost £6,000 a year as a family. Or, finally, take Mrs Taylor, who works in one of the 150 branches of Argos that are now located inside Sainsbury’s stores. Once the new contracts are introduced, Mrs Taylor can expect her hourly pay to be £1.20 less than that of her Sainsbury’s colleagues, despite working in the same store. That is what makes Sainsbury’s insistence that this is an operation in fairness so much less believable.

Could the need for a whole company pay policy be any clearer? What is needed is a policy where the pay for all staff is decided collectively at one point in time by one committee in the organisation. The consultation on these new contracts at Sainsbury’s is coming to a close. Hundreds of MPs have signed letters of support, and thousands upon thousands of colleagues and customers have spoken out. Even the Prime Minister has expressed concern. Perhaps the only hope left for these loyal staff members is a strong statement of support from the Minister this evening.

After a hard day’s work, the very least that an employee deserves is to take home a fair wage that is proportionate to that of their colleagues. Without a whole company pay policy, organisations such as Sainsbury’s can justify treating each level of their staff hierarchy independently and rewarding the minority at the top at the expense of those at the bottom. The damaging decomposition of workers’ rights under this Government has been widely felt. The enforcement of whole company pay policies would be the first step back to a country where hard-working employees can expect to receive a fair deal at work.

--- Later in debate ---

[Richard Harrington]

I absolutely agree, but pay is earned for several reasons. Hard work is definitely one of them. I am not comparing ourselves, but we are all here at 11.40 pm, so no one could say that we are not working hard. The dispute would come from the second reason for pay, which is how well someone is working and the their responsibilities. I would not ask the hon. Gentleman to intervene to say how well he thinks I am doing, but I certainly know that he and the hon. Member for Mitcham and Morden do a good job. I am not making light of the situation; I mean that reward is partly based on how well someone is doing and partly on how hard they work, but part of it is about responsibility. We would all agree that chief executives have a lot of responsibility, and they should not have job security because they are putting themselves on the line for workers, shareholders, banks or whomever it might be. This is a question of extent and of how much reward is performance related and how much of it is a basic salary. I hope that the hon. Member for Mitcham and Morden and the hon. Member for Strangford (Jim Shannon) do not think that I am trying to make light of this, because there is a significant issue here.

We may disagree on this, but I think the answer lies with transparency and accountability in how executive pay is set and in how it fits with wider employee pay and incentives. The Government have introduced major reforms on executive pay, and the first package in 2013 and the second package approved by Parliament just last week are important. The 2013 reforms compelled quoted companies to disclose each year the total pay and benefits of their CEOs and directors and to explain how that relates to company and individual performance. For the first time—this is important—we gave shareholders a legally binding vote on a company’s executive pay policy, with which all payments to directors must comply. Taken together, the two reforms have forced companies to be much more rigorous and transparent in their approach to executive pay.

However, more needed to be done, in particular to increase transparency and accountability in how pay at the top relates to pay and reward across the rest of the company. It is vital that companies demonstrate cohesion and a comprehensible line of sight between executive pay and the pay of other employees. They are all part of the company, and part of its success, and a confident organisation should be willing and able to explain how its approach to pay is consistent across all its employees. That is why the Government are now implementing major new statutory and code-based reform measures on executive pay as part of a wider package of corporate governance reform.

The headline reform measure—this is directly relevant to the hon. Lady’s speech—is to require all quoted companies to disclose and explain the ratio of their CEO’s pay to both the median average and the quartile pay of their UK employees. The pay ratio statement must include an explanation of

“whether, and if so why, the company believes the median pay ratio for the relevant financial year is consistent with the pay, reward and progression policies for the company’s UK employees taken as a whole.”

That will allow shareholders, employees and other interested parties to see how pay in the boardroom relates to wider employee pay throughout the company and, importantly, whether and how the directors of the company believe the differentials are justified. This is not just about employees, important though they are, because shareholders have strongly backed the introduction of pay ratio reporting and will be watching closely both the figures and the explanations, which they have made clear must be meaningful and relevant.

UK shareholders are increasingly vocal and assertive in holding companies to account on executive pay and other issues, which the Government support. The Government requested the Investment Association to establish the world’s first public register of shareholder dissent, so that there is a publicly monitored record of companies that receive more than 20% votes against executive pay packages. Halfway through the first year, there have been 140 significant shareholder rebellions on pay and other matters—more than the total for the whole of last year.

The Government have asked the Financial Reporting Council to consult on a number of new executive pay provisions in the UK corporate governance code, including a requirement for remuneration committees to explain what engagement with the wider workforce has taken place on how executive pay aligns with wider company policy. I am pleased to say that this new measure forms part of the revised corporate governance code published by the FRC earlier today—this is very topical—as part of a wider package of corporate governance reforms that require companies to put in place one or more of either a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director. It is complicated, but we are making developments. Companies will have to report on how they have had regard to the interests of employees. The statutory instrument was approved by Parliament last week and requires large companies to report each year on how they have had regard to the interests of their employees and on how it has influenced the decision making of directors.

All these measures will be in place from the start of January 2019, and I take the opportunity to thank everyone in this House, particularly the Business, Energy and Industrial Strategy Committee and the all-party parliamentary group on corporate governance, for their constructive contributions to this agenda over the past two years.

Before I finish, I will address some of the questions raised by the hon. Member for Mitcham and Morden.

[Siobhain McDonagh]

Will the Minister address the issue of pay between assignment contracts?

[Richard Harrington]

I will do my best but, if the hon. Lady is not satisfied with my answer because of the time available, I would be very happy to meet her to discuss this complex subject.

The question of agency staff being paid less despite doing the same work are known as assignment contracts, as I am sure you are aware, Mr Deputy Speaker—you are omnipotent and know everything, or most things, I have ever asked you about. The hon. Lady referred to that as subcontracting some of the lower-paid workers. The Government are looking into that as part of our response to the Taylor review. There is a specific consultation on agency workers in response to that. I know that might not sound like the comprehensive answer the hon. Lady wants, but it is work in progress and I suggest she wait a little before having the meeting, when I will be happy to go through it with her.

Mr Simon Roberts, the retail and operations director of Sainsbury’s, wrote a very comprehensive letter to the Government proudly saying that Sainsbury’s has met the hon. Lady on several occasions. Mr Roberts clearly has not satisfied her, but he has written a four-page letter to us about it. At least Sainsbury’s has had the guts to meet the hon. Lady, and I am sorry that she is not satisfied.

Sainsbury’s has 185,000 employees, and the hon. Lady’s main point is that it is unfair of Sainsbury’s to continue paying its CEO a bonus while cutting bonuses and other variable pay for the rest of its 185,000 staff. The company says it has taken steps to improve its pay offer and specifically to put in place measures to support the staff most affected by the proposed changes, which of course I welcome. I wonder whether the hon. Lady is aware of that.

[Siobhain McDonagh]

I am completely unaware of what those measures are, because I assure the Minister that at the annual general meeting last week there was a bullish contribution from the chair of the board saying it had done nothing wrong and that it is equalising pay. My concern is that 9,000 of Sainsbury’s most long-standing members of staff will be getting a pay cut from 2020.

[Richard Harrington]

I will send Mr Simon Roberts a copy of the Hansard record of this debate tomorrow and say that the hon. Lady is not satisfied with that answer. I will ask what the details of the improved pay offer are and what measures have been put in place to support the staff most affected by the proposed changes. On the face of it, I welcome what has been done, but it may be that this is not exactly as Sainsbury’s says it is. The company says it is committed to increasing its hourly rate of pay from £8 to £9.20 an hour from September and it has promised top-up payments from 18 months to support what it says are the “small minority” of Sainsbury’s employees whose loss of certain benefits will have seen them worse-off overall under the pay deal.

In conclusion, I thank the hon. Lady again for giving the House the opportunity to debate these important issues. It is absolutely right that companies approach pay and reward holistically and that executive pay aligns with wider pay and reward. I think the new reforms that Parliament has approved will help in that regard, while keeping the UK a world leader in corporate governance.

Question put and agreed to.