10 for 10: Britain needs a Fair Wages Bill

August 16, 2018

It is deeply wrong that parliament is on holiday for 10 weeks at a time of national crisis and peril, as I argue here. So what should the government be bringing to parliament instead of a 10-week holiday? I will be publishing detailed proposals for 10 pieces of legislation that would answer the needs of the millions who are left out and left behind in today’s Britain. Number three in this series is a bill to ensure fair pay across the country.

 

In 1945 Clement Attlee argued for “making ‘fair shares’ the national rule”. One can only imagine his fury if he were to hear today’s finding by the High Pay Centre that chief executive pay has surged while the earnings of average British workers have stagnated for a decade. It is truly staggering that it would now take the median worker 167 years to earn the median annual pay of a FTSE 100 boss.

 

The Attlee government offers a workable model for immediately addressing this national disgrace: The Fair Wages Resolution of 1946 required that every contractor to the public sector comply with specified ‘fair’ standards of wages. Tellingly, it was repealed in 1983 by the Thatcher government and was unfortunately never fully reinstated.

 

A modern Fair Wages Bill is urgently needed today because excessive executive pay is rampant at companies that make enormous revenue from public sector. Research finds that the chief executives of public sector contractors like Serco, G4S, and Mitie that are being paid billions in public money to do everything from running prisons to building schools earned an eye watering average of £2.7m in 2016. It is nonsense to suggest that this is either pay for performance or value for money: while British travellers have been hammered by rising rail fares and train disruptions, the bosses of railway operating companies are earning millions. Incredibly, the boss of Stagecoach, which has been bailed out by Chris Grayling after failing to operate the East Coast franchise, secured a £2.5m pay package for 2018. The collapse of construction company Carillion responsible for huge government projects is a salutary tale of how broken this system is: Its board put the payment of large dividends before proper contributions to the pension fund, which it self-servingly deferred.

 

A Fair Wages Bill would require that every public contractor adhere to a new stakeholder settlement. Every company’s remuneration committee should include employee representatives and publish an annual fair pay report detailing the organisation’s pay policy and explaining why employees at the top and bottom are paid as they are. Companies must no longer be allowed to opaquely use public money to pay CEOs 10-20 times what the Prime Minister earns.

 

Attlee worked tirelessly to see his vision of ‘fair shares’ to fruition. Parliament should follow his example and pass a Fair Wages Bill rather than taking a holiday.

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Andrew Adonis is a Labour peer, author, and leading campaigner for a People's Vote