Top pay: tackle it at source, not just downstream - One Society Media Release

Submitted by Kathryn Busby on 1 June 2010

One Society Media Release – 30 May 2010

One Society is a new campaign, set up in association with The Equality Trust, to highlight the negative effects of income inequality, showcase research and policy solutions, and bring together people and organisations in support of a more equal society.

Public sector top pay move welcomed; but ineffective if not widened out to private sector & City

Responding to the decision by Communities and Local Government Secretary Eric Pickles to veto the pay package for the Audit Commission's new chief executive, Malcolm Clark - Campaign Director of One Society - said: "Any attempt to provide a countervailing force to runaway top pay, and the beauty contest 'I'm worth it' factor that has exacerbated it, is to be welcomed. However the move will be inadequate unless the government takes action on top pay in the private sector too. That is where the real drivers of executive wage growth originate."

"Measures in the public sector alone may save a small amount of money, but could also restrict the pool of people willing to take up these jobs. That is exactly what the Audit Commission found so far in its search for a new chief executive, which is why they resorted to offering such a high pay package."

"Our recommendation is to widen out the concept of the pay ratio to all sectors of the economy. That is one of the few ways that the seemingly inexorable upward trend in top pay can be capped. Such a move would ease the pay pressure at the top of the public sector more effectively and longer-term than the type of one-off symbolic act taken just now by Eric Pickles. There would be other benefits too. An increasing body of research suggests that large gaps in income can be detrimental to economic efficiency and employee wellbeing. Both improve when income inequality is reduced."

"Furthermore, the burden of reducing the deficit should be shared fairly with those whose income and wealth substantially increased over the past decade, relative to almost everyone else in this country. That will be the real test of this Government's policies."

Media Contact:

Malcolm Clark (m) 07733322148 (w) 020 7922 7921 malcolm@onesociety.org.uk Twitter: @One_Society

Notes to Editors:

One Society is a new campaign, set up in association with The Equality Trust, to highlight the negative effects of income inequality, showcase research and policy solutions, and bring together people and organisations in support of a more equal society. The evidence, the policies are the support are converging in favour of taking decisive action to tackle the gap between rich and poor. www.onesociety.org.uk
One Society believes that a larger divide, in wealth and power, between those at the very top and the rest of society is damaging to national well being. More equal societies work better for everyone; not just those at the bottom but right the way up: we all benefit.
View a full list of the type of policies we believe need to be implemented to take us towards a more equal society http://www.onesociety.org.uk/uploads/pdfs/PolicyWheel.pdf
During the election, all three party leaders were asked to sign up to a 'Fairness Test' - an impact assessment on income inequality of their policies and measures to reduce the deficit. Nick Clegg was the only one to formally sign up; although David Cameron did engage positively with the concept too. We are awaiting a response from the Coalition as to what their position is now. www.equalitytrust.org.uk/fairnesstest
75 MPs signed up to our 'Equality Pledge' during the election http://www.equalitytrust.org.uk/node/361
Compelling evidence shows that large income inequalities within societies damage the social fabric and quality of life for everyone. The evidence is published in Richard Wilkinson & Kate Pickett's book The Spirit Level: why equality is better for everyone. www.equalitytrust.org.uk
Income inequality matters - it affects the quality of our lives, the health of our economy and the state of the communities we live in. Throughout the income scale we all bear the costs of a more unequal society. Those are the conclusions of the government-funded National Equality Panel report, Analysis of Economic Inequality, published Jan 2010.