High Pay Commission launched

The think tank Compass has launched its High Pay Commission, following the securing of funding both from supporters and from the Joseph Rowntree Charitable Trust.

The Commission has issued a call for evidence, today publishing opinion polling research demonstrating that the public consistently under-estimates the dimensions of executive pay. At a time when there is a yawning remuneration gap between the pay of executives of large companies and everyone else charged with responsibility as being the engine of economic re-growth, when top executives give themselves rewards equivalent to the pay of 128 of their employees (a figure which itself is nearly three times what it was a decade ago), and when executive pay is rising much faster than the performance of their companies, this is a good time to consider the realities of executive pay. It’s not a question of envy, but it is a question of establishing fairness, as the Commission Chair, Deborah Hargreaves, succinctly and astutely pointed out in her blog post.

The Commission will run for one year. Its approach is open and it seeks to engage, including amongst those the target of its work, and to explore the impact on society of such a differential approach to reward as currently exists. If at the end it has managed to produce workable proposals for controlling the outlandish, unwarranted and inexplicable rise in rewards at executive level in the private sector within the Anglo-Saxon model of capitalism – and I hope it does – it will have made an extremely useful contribution not only to the fairness agenda but also to the notion of how market-based approaches to pay essentially distort the decisions our society makes about the direction and locus of economic growth. Given the reasons for the economic crisis, evaluating those is absolutely timely.

Public sector pay

So Panorama has a database of top people’s pay.

I’m not a natural defender of high pay – except where negotiated by a trade union, obviously – but I’m a little puzzled by two things:

1. a private sector where executive pay has long spiralled out of control is evidently going to have knock-on effects on the public sector, which is competing for similar talent. Those that live by the market die by it, surely?

2. we ought not to be surprised when a public sector which has been commercialised, contractorised and privatised beyond all recognition of the term ‘public service’ becomes influenced by private sector practices, including on pay. Not only is it playing catch-up with the private sector on pay, it has also, in terms of ethos, become dominated by private sector approaches and, in the current environment, it is looking for private sector expertise.

In these circumstances, appealing to some ‘old fashioned’ public service ethos, as Francis Maude is doing, looks rather quaint in itself.

Union leaders who argue that this is another attack on the public sector may well have a point. More than that, however, if we want to start sorting out the pressures on pay which lead to what people are arguing are inflated salaries in the public sector, it makes no sense to start within the public sector – which is the symptom of the problems, not the cause. As superficially ‘attractive’ as it might seem, in a time of budget cutbacks, to have another bash at the public sector, solving the problems of out of control senior pay means tackling it first, and above all, in the private sector. Motion 27A, carried at last week’s TUC, has a lot to commend in this direction, seeking a ‘shadow’ high pay commission to investigate high pay across the economy, not least in FTSE100 companies.

In the meantime, a government that recognised that, which recognised the nature of the links between the two, and which therefore was prepared to adopt a holistic approach to the issue, might command a bit more respect when talking about the need for restraint in the public sphere.