Liberal Democrat Conference 2011: Business Reaction To Vince Cable And Tim Farron's Speeches
Vince Cable’s plan to force businesses to halt "payouts for failure" was met with a subdued response at the Liberal Democrat conference.
The business secretary’s calls for “responsible capitalism” and an end to "appalling inequalities of income and wealth” received occasional cries of “hear hear”, but no real rapturous applause and only a rather brief and perfunctory standing ovation.
It was in sharp contrast to Liberal Democrat deputy leader Tim Farron’s speech on Sunday - which was met with laughter and praise across the political spectrum.
One of the biggest cheers was for Farron’s claim that cutting the 50p top rate of tax would be “immoral”. But business leaders and opposition groups have said Cable’s condemnation of high pay, and the Liberal Democrats’ calls for the wealthy to share the tax burden, are admirable but in many cases untenable.
Shadow business secretary John Denham hinted that Cable’s speech was just rhethoric, saying “the Lib Dems will be judged by their actions, not their words ... And making his annual speech on high pay to the Lib Dem faithful doesn’t make it policy in the Tory-led Government. Given his failure on banks, why should anyone believe he can deliver on high pay? Vince Cable needs to bring forward concrete proposals on boardroom pay and not capitulate to the Treasury as usual”, he claimed in a statement released on Monday afternoon.
And the British Bankers’ Association were unhappy with Cable’s description of them as ‘Gamblers’ (“At present, banks are offered a one way bet. If they gamble and win; they fill up the bonus pool. But when they lose, the taxpayer pays.”)
"The measures outlined in Dr Cable's speech appear to extend the current regulations on financial sector pay and bonuses to other sectors of UK business," a spokesperson told the HuffPost UK.
"The UK's banks are committed to ensuring the UK's financial stability and promoting economic recovery. Since the global financial crisis they have been implementing a series of significant regulatory reforms, and will be looking at the forthcoming discussions paper to see whether the proposals would mean additional changes."
And when it comes to the 50p tax rate, business does not agree with Tim Farron’s assessment that a cut would be “morally repugnant”. City head hunter Chris Forbes told the Huffington Post UK that the 50p tax rate was viewed a hindrance to the UK’s position as a leading world economy.
"The additional tax revenue does not balance the lost investment revenue or take into account businesses that are moving their headquarters to low tax locations like Switzerland and Singapore."
BT CEO Ian Livingston agreed, telling HuffPost that higher taxes for the rich should be shown to raise revenue. "I do not mind paying 50 per cent if it is necessary for the economy. I don’t think it is a good way to raise revenue as it doesn’t raise a lot but does impact behaviour. I think the better off do have to shoulder a burden in difficult times but the focus should be on measures that raise revenue efficiently without making the UK a materially less attractive place to invest or do business in."
Cable's promise to make executive pay transparent, however, was welcomed by headhunter Forbes.
"It is my opinion that executive and board level salaries for publicly listen and government bodies should be available. And that performance bonuses should be awarded in businesses that are being turned around or increasing their profitability.
"A culture of large bonuses for board members of companies with falling balance sheets is counterproductive and where performance has been particularly poor accounting for mitigating circumstances little or no bonus should be received."
Andrew Cave of the Federation of small businesses accused Cable of “playing to the galleries” with his comments on high pay in business. “He can be forgiven for that, it’s his conference after all. We’re less concerned about top-executive pay, but we are concerned that there is a lot of short-termism amongst big UK corporates at the moment.
“They’re sitting on big piles of cash and they’re not necessarily investing that in growth and we need to see that changed for that to spread through supply chains and to the wider economy”, he told the BBC on Monday.
But the TUC, however, have welcomed Cable’s proposals to put employees on renumeration committees.
General Secretary Brendan Barber said in a statement released on Monday afternoon: “The UK’s flawed executive pay culture has allowed those at the top to award themselves vast pay increases without any link to performance. This system contributed to the financial crash and needs urgent reform.
“Workers’ representatives on remuneration committees will help regain public confidence in executive pay by adding a sense of perspective and forcing directors to explain how their rewards relate to those offered to their workforce.
“But any attempt to seriously reform executive pay will be fiercely resisted by vested interests in the City – many of whom rely on the status quo for their own inflated salaries – and the government must be prepared to stand up to them.”