May’s tough talk comes to nothing

The PM’s promised crackdown on corporate excess and low pay hasn’t amounted to much now that she’s in No 10. By David Burrows.

Theresa May might lead an “unashamedly pro-business” government, but that doesn’t mean she is happy to let the fat cats continue to gorge while the “just about managing” head to food banks after a 12-hour shift at a Michelin-starred restaurant during which they earned below the legal minimum wage.

“There is an irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses,” the prime minister said in July as she pledged to ensure workers are represented on company boards. Strong words.

But that was July, when she was campaigning to get into Number 10. Last month, her government published a consultation on its proposals to tackle corporate excess. Has May delivered the clampdown on corporates she promised? Not quite.

This paper focuses on “ensuring that executive pay is properly aligned to long-term performance, giving greater voice to employees and consumers in the boardroom, and raising the bar for governance standards in the largest privately held companies”. May’s foreword makes for inspiring reading; exactly what voters will want to hear after the BHS and Sports Direct scandals.

But dig into the detail and there is little cause for cheer. Companies won’t be forced to appoint workers to boards after all. At November’s annual conference of the Confederation of British Industry, May argued that workers’ voices will still be heard in the boardroom. Others are not so sure. This early U-turn made her sound like the “stereotypical bad boss”, according to the High Pay Centre, “who makes a promise at the staff meeting only to renege on it when the going gets tough”.

Still, shareholders could be given more (though still soft) powers to vote against bosses’ pay. Perhaps more controversially, plans to publish pay ratios are still on the table. The idea was first floated by Vince Cable, the business secretary during the coalition government, but then dropped because of what he referred to as the “Goldman-Waitrose issue” (whereby the bank would perform better on the ratios than the ethical supermarket because the average pay of bankers is so high).

The EU also canned the idea. “As the EU tends to be more dirigiste than Britain, this does not encourage hopes that much of the green paper will survive the consultation period,” noted the Economist.

At the other end of the pay scale it is all about survival. The Sports Direct story has dominated coverage of workers on low pay, while the gig economy poses a clear and present threat to workers’ rights (see later in this issue), but this is not where the issues end.

The finding by the Guardian that staff at Le Gavroche, the Michelin-starred restaurant run by Michel Roux Jr, were being paid almost £2 less than the national living wage of £7.20 for over-25s is deeply concerning, if not completely surprising. “Roux gets coverage because he is famous but this is endemic,” said Dave Turnbull, a regional offer for the hospitality sector at the trade union Unite.

Underpayment at the bottom, overpayment at the top: May is finding it tough as the champion of working-class voters.

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