Osborne calls for calm in executive pay debate

By @ibtimes on

Policymakers should not get swept up in punishing well-paid company executives, finance minister George Osborne will argue on Tuesday, urging that improvements to pay policies should come without anti-business rhetoric.

With many workers experiencing effective pay cuts after inflation, the prospect of another bumper bonus round for executives at Britain's biggest firms is stoking up widespread resentment.

Stephen Hester, the chief executive of majority state-owned bank RBS, waived almost a million pounds in bonuses in January after media outrage and political pressure from the Conservative-Liberal Democrat government and the opposition Labour Party.

Bosses at state-backed Network Rail also turned down their annual bonuses this month, though the government is braced for another surge of public anger over a big bonus pay-out expected this week for Barclays chief executive Bob Diamond.

However, government ministers are worried that a perception that Britain is hostile to business could drive away both investment and top talent from its biggest companies.

Osborne will seek to temper the debate, while pointing out the action ministers are taking to crack down on any unacceptable excess at the top of the pay scale, in a speech to small business leaders on Tuesday.

Of course, rewards for failure are unacceptable -- and those who believe in the free market are the first to say so, he will say, according to extracts from the speech released by his office in advance.

But a strong, free market economy must be built on rewards for success. There are those who are trying to create an anti-business culture in Britain -- and we have to stop them.

The government has proposed strengthening the role that shareholders play in deciding rewards for executives, alongside other measures such as improving pay transparency, although Labour argues that will do little to change the status quo.

(Reporting by Matt Falloon; Editing by Will Waterman)

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