Theresa May has “bottled it” when it comes to serious reform of company board rooms, trade union chief Frances O’Grady claimed today as she slammed the Government’s “feeble” plans.
Ministers have announced measures designed to reign in reckless behaviour by company directors, but watered down plans to give workers a voice in the boardroom and shareholders an annual vote on executive pay.
Instead, companies will have to reveal how much their chief executive is paid relative to the company’s average salary, and also disclose if shareholders have raised concerns over executive pay deals.
Labour called the new proposals “a fraud”, and speaking on BBC Radio 4’s Today programme this morning TUC boss O’Grady was equally as damning.
She said: “The Government has bottled it in the face of business lobbying and that doesn’t bode well for tackling some of these really big problems like greed at the top and what’s really happening to everybody else’s pay.
“I have to say if the Government had shown an ounce of enthusiasm for capping top pay that it’s show for capping the pay of firefighters, nurses and teachers we would probably be in a very different place.”
When O’Grady was challenged as to whether any of the proposals would help curb excessive pay at the top of companies, she replied: “We may get one off reductions in top pay for PR purposes but then see it creeping back.
“These proposals have no teeth and much of the information they are proposing to make transparent is already in the public domain.”
Business Secretary Greg Clark will today set out details of the Government’s plans, which he claims will make large companies “more transparent and accountable to their employees and shareholders.”
One measure designed to increase workers voice in the boardroom will see firms having to either assign a non-executive director to represent employees; create an employee advisory council; or nominate a director from the workforce.
Labour’s Shadow Business Secretary Rebecca Long-Bailey claimed the plan “is a fraud, watering down an original promise to increase workers’ voice to a lone representative on the board of directors or a separate employee advisory council. Each of these will be easily outvoted or ignored.
She added: “The Tories seem to believe fixing Britain’s broken system of corporate governance, which not only leads to scandals like BHS, extreme executive pay, but also growing inequality and stagnating wages, is just a matter of changing one or two nameplates around the boardroom table.”
The Government will also introduce new laws to require around 900 listed companies to annually publish and justify the pay ratio between chief executives and their average UK worker; force all companies of a significant size to publicly explain how their directors take employees’ and shareholders’ interests into account; and make all large companies publicise their responsible business arrangements.
Theresa May put tackling rogue behavior at the top of companies front and centre of her pitch to take over as Conservative Party leader in 2016.
In the only speech she gave during the short-lived leadership campaign, May promised that “under my leadership, the Conservative party will put itself - completely, absolutely, unequivocally - at the service of working people.”
She described boardrooms of being made up of people from “narrow social and professional circles” and added: “If I’m prime minister, we’re going to change that system – and we’re going to have not just consumers represented on company boards, but workers as well.”
She went on: “We’re the Conservative party, and yes, we’re the party of enterprise – but that does not mean we should be prepared to accept that ‘anything goes’.”