Chuka Umunna says business secretary must resist rightwing pressure for return to light-touch business regulation
The shadow business secretary has warned the government not to try to snuff out the “shareholder spring” against executive pay.
Chuka Umunna said the business secretary, Vince Cable, must proceed with his plans for boardroom reform and not be cowed by rightwingers upset by the coalition’s local election losses.
“We are seeing an awakening in the City and on Wall Street that we cannot go back to business as usual and rewards for failure. When we raised these issues in the past we were accused of being anti-business and yet it is clear that it is those who oppose change who are out of step with investors and society,” Umunna said.
“You will see the Conservative right call for a return to traditional, light-touch business regulation and put a lot of pressure on [David] Cameron and [George] Osborne, but this is not in the interest of the economy. Cable has already found it difficult to pursue reforms because of the roadblocks put up by No 10 and the Treasury.”
In a turbulent round of annual general meetings, shareholders of major companies such as Aviva and Barclays Bank voted in large blocks against high pay awards. Some high-profile chief executives, such as Sly Bailey of the newspaper group Trinity Mirror, opted to depart amid criticism of the way their businesses were run. There could be another flashpoint at bookmaker William Hill’s AGM on Tuesday.
Cable said on Saturday he would press ahead with plans to hand investors more powers to clamp down on excessive bonuses. Among these powers is a binding vote on pay; current votes are advisory.
Umunna said the threshold for passing pay deals should be 75%, up from 50% now. “There is no point in having a binding vote if it does not have teeth,” he said.
Anger about executive pay is not limited to Britain. François Holland, the French president-elect, wants senior executives to earn no more than 20 times the average in their company. The average ratio in top British companies is 145:1.