So Danny Alexander, Chief Secretary to the Treasury, cheers us up today by telling us that if a quarter of the annual tax receipts foregone through either avoidance, evasion or uncollected debt were actually levied, it could cut income tax by 2p in the £ (roughly £10bn). It would have been better if he’d said it would then not be necessary for Cameron in his speech today to propose robbing and harassing those who genuinely need benefits for which they have contributed via national insurance contributions and which he has no contractual authority to renege on.
But the real point about Alexander’s throwaway remark is that instead of telling us what might be – he after all is supposed to be in government! – why doesn’t he actually deliver the goal instead of just talking about it? And it’s not just tax avoidance: it’s top pay in the boardroom which is still heading upwards in the stratosphere and the government just wagging a finger at it.
Last year top executive pay (CEOs in the top FTSE-100 companies) went up 12% from £4.5m a year to £4.8m a year. That’s an increase, at a time when the average-paid worker suffered a real terms drop in pay of nearly 2%, from £86,540 a week to £92,308, an increase of £5,768 a week, which apparently they needed to keep the wolf from the door. When has the situation ever cried out more for a firm and effective policy to put an end to such greed and selfishness? And what did we get? Cable’s statement last week (and I’m well aware that with any other Minister in this government it would have been worse or we would have got nothing at all).
There are four huge loopholes in Cable’s proposals for a binding shareholder vote every 3 years on top pay.
- The vote won’t be on individual pay packages with their cold, hard and swollen numbers, it will be instead on the much more fluid and malleable issue of board pay strategy which is like trying to target custard.
- The shareholders’ binding vote was going to be on the total remuneration package, including share options, mega-bonuses, enormous share hand-outs, long-term incentive schemes, and bigger pension pots, but that is now going to be subject to a merely advisory vote which the executive can ignore.
- The binding vote is every 3 years, if at all, which gives the executive plenty of time to pack in excessive awards on all the above counts in the meantime.
- And even if a vote takes place, it will depend on well-paid fund managers taking a stand against other members of the same cosy club.
Until the vote depends on the employees as well, the £5m a year executives can still sleep soundly in their beds.