ith a national train strike looming, the Government’s stance on public sector pay hardened significantly today. Treasury Chief Secretary Simon Clarke warned that “we do need to see restraint in pay bargaining otherwise it will get out of control” and signalled that staff won’t be offered real-terms pay rises.
“People have to recognise, if we’re going to forestall the evil of inflation – inflation destroys savings, it destroys growth, it damages any economy where it gets an endemic grip – then we are going to have to show collective, society-wide responsibility,” Clarke said.
Funnily enough, Clarke’s words were identical to those of Bank of England Governor Andrew Bailey. “We do need to see restraint in pay bargaining otherwise it will get out of control,” Bailey had said in February. His remarks were swiftly branded a “sick joke” by unions, not least because his own salary was nearly £500,000.
The curious thing is that, back then, No 10 joined in the backlash, too. “It’s not something that the Prime Minister is calling for. We obviously want a high-growth economy and we want people’s wages to increase,” the PM’s official spokesman said at the time.
Today, Clarke distanced himself from that spokesman. Indeed, the spokesman distanced himself from himself. In a handbrake turn on whether private firms should pay higher wages, he said: “Simon Clarke set out what the Government needs to take heed of. We are sure private companies will be taking heed of that as well.”
Confused? Well, that’s certainly how Tory MPs feel about their party’s overall economic strategy, or lack of one. Rishi Sunak has given the UK its highest tax burden for decades, yet still insists he’s a “tax cutting Chancellor”. Only last October (in his Tory conference speech), Boris Johnson chided private firms for relying on immigration to keep down wages and effectively urged them to pay more. Now, his Government is saying employers should keep a lid on any rises.
The confusion was laid bare in the PM’s spokesman’s own position today. “The Government wants a high wage, high growth economy,” he said. But then admitted that was more a longer-term “ambition” and right now tackling inflation was the priority. When asked if the No 10 stance amounted to “high wages, just not now”, he replied, “I wouldn’t put a time frame on it, given the variables we are experiencing at the moment, not least war in Europe.”
But I’ve discovered that there is one bit of the economy where the Government is very keen on letting pay go up: City bosses. I’ve been leaked an internal Whitehall letter, written by Johnson’s chief of staff Steve Barclay to Sunak, in which he announces No 10 wants current restrictions on bosses’ pay to be “removed” to show “the benefits of Brexit”.
The confidential letter shows that after intensive talks with Policy Minister Andrew Griffith, the No 10 Policy Unit and Minister for Brexit Opportunities Jacob Rees-Mogg, Barclay made a formal request to Business Secretary Kwasi Kwarteng to change the rules on corporate pay.
Outlining “deregulatory measures to reduce the overall burden on business”, the letter included this eye-catching proposal: “Removing restrictions on director (and specifically NED [non-executive director]) remuneration as suggested by the London Stock Exchange Group to improve London’s attractiveness for listings.”
I understand that among the changes being considered by the Department for Business, Energy and Industrial Strategy are amending the UK corporate governance code to allow non-executive directors – outsiders who oversee pay packages – to own more shares in that company.
Current UK rules – inherited from the EU – also include a cap on bonus pay, set at no more than 100 per cent of fixed pay or double that with explicit shareholder approval. They include “clawback” arrangements in case a firm finds reason to recall any salary, and the power of shareholders to know details of directors’ pay packages, so they can approve them or not.
All the restrictions were introduced by the EU in the wake of the 2008 financial crisis and although the Treasury didn’t particularly like them, they went along with them.
It was clear last August that Sunak could see what a political disaster it would be to tear up the bonus cap in the middle of a cost of living crisis. Treasury insiders stressed then that the issue was not a priority, no active work was being undertaken on the issue and anyway it was all a matter for the Prudential Regulation Authority watchdog.
(There’s also a Brexit irony at work here too. For many in the City, what they really want more than freedoms on banker pay is freedoms on who can and can’t work in the UK on short-term company transfers. More visas for foreign-born staff is their real ask.)
Another problem for the Government is the perception from business at home and abroad that it simply can’t be trusted to stick to any policy for very long.
One senior Tory MP, a former minister, told me: “This is a government whose unreliability on tax is up there with any third world country. We rule out windfall taxes, then we enact them. We say we won’t put up National Insurance or Corporation tax, then we do. Corporate planners plan years ahead, how can they believe this Goverment will do what it says?” The same problem may apply to any moves to ditch corporate pay rules.
A more fundamental difficulty is the confusion over what kind of Brexit Britain the Johnson Government wants. Does it really want to head down the low tax, low regulation model that depicts the City of London as a kind of Singapore-on-Thames? Or does the PM’s idea of a “Brexity Hezza” mean he is a high spending, statist in the mould of Michael Heseltine?
As Mayor of London, Johnson himself bitterly opposed the EU banker bonus cap. Will he now get his way?
In his party conference speech just nine months ago, Johnson boasted: “I am pleased to say that after years of stagnation – more than a decade – wages are going up faster than before the pandemic began.” Unfortunately, this month, real pay fell by 2.2 per cent – the lowest in a decade. To underline how huge banker incomes are, that average figure was turned into a 0.4 per cent increase in pay once bonuses were taken into account.
For a Government demanding wage restraint from nurses, doctors, teachers, bin men, bus drivers and rail workers, it still feels like a potentially massive PR disaster to simultaneously draft proposals that would let rich City types get even richer.
Removing the curbs on corporate pay is described in the Barclay letter as one of the “benefits of Brexit”. And there’s no doubt that some in the Square Mile and Canary Wharf believe that allowing greater freedom on directors’ pay will help London compete with New York or Singapore.
But for the millions who voted for Brexit in part to see their own wages go up, the contrast between their own falling incomes and moves to further boost the latest bankers’ bonanza may well be galling. Increasing City salaries to keep up with Wall Street wasn’t exactly the kind of “levelling up” they were promised in 2019.
Just as “Partygate” gave the lasting impression of a Downing Street that felt Covid laws were for everyone else but itself, letting rip on bosses’ pay risks sending a strong signal that wage restraint is for “little people” too.
“i stress, i dont believe economic equality is possible; indeed some measure of inequality is essential for the spirit of envy and keeping up with the Joneses that is, like greed, a valuable spur to economic activity.” – Boris Johnson
This feels like a good time to remind every other party that all they have to do at the next election is work together and then install PR and we will never have to deal with this Orwellian nightmare again.
Just when you think you can’t loathe the scruffy lying, cheating, incompetent little bastard any more, he always manages to make it happen.
How will he be restrain his working girls pay ???
Would carrie have rendered her service for £9.50 an hour ????
If they remove bonus restrictions doesn’t that mean that corporations on public sector contracts can cream off any amount of money they like as bonuses for directors?
So ministers coming out and saying fuck off and don’t be selfish asking for a pay rise because it’s going to cause inflation, then – but we’re going to boost bankers pay to show Brexit benefits.
Well isn’t that nice.
It’s almost as is…bare with me on this point…that the Conservative party only think of themselves and the rich.
Must be wrong though, would do thay would they?
Woah woah this is nothing to look at. hey look there’s someone earning like 30k, get em!!!
Perhaps the theory is inflation does not happen with a few people being richer but only if the en masse is richer?
That creature and most of its party needs put in jail.
I pray to any Gods that listen, to make sure the strikes due bring this Government down like the 70’s when they last tried to hold back wages and public sector rises. Yeah it was an awful time, power cuts galore, no deliveries coz no lorry drivers, NHS out on strike, dustbins overflowing but the Winter of Discontent did its job and got rid of Callaghan and his insanely divided Government/Party. Unfortunately, it let in Thatcher but hey ho swings & roundabouts
I’m pretty sure that if the Tories thought they and their friends could keep getting rich and still have a nice life they’d euthanise the rest of the population.
I would like to remind folks of tis from January [https://youtu.be/TzDCmrWOr5Y](https://youtu.be/TzDCmrWOr5Y) this was the fraud prevention ministers resignation speech in the HoL, We are now offically in a kleptocracy.
Hang on a minute, I thought one of the main points of Brexit was to remove cheap EU labour and therefore drive up wages of everybody else. This narrative was being spouted by the government and their newpaper shills up until very recently.
Now all of a sudden the government are trying to surpress wages after the cheap EU labour has been banished? What the actual fuck is going on? This is some next level gaslighting of the public.
Its almost as if the whole Brexit concept was a scam and that the government has absolutely no idea how to handle the inevitable fallout…*almost*
I wonder if the poor people who lap up everything this government says they I’ll ever realise they are not for them!!
Of course, London bosses NEED that boost. They can’t be expected to just live on their hundreds of thousands to millions per year. The peasents can.
​
I am reminded of Ancient Rome. Even then, Rome was kinda fairer to it’s citizens and you had a decent chance of making a quite of bit of cash if you joined the army and it was campaigning.
No 10 wants current restrictions on bosses’ pay to be “removed” to show “the benefits of Brexit”.
Shame the average guy will never hear anything about this.
18 comments
ith a national train strike looming, the Government’s stance on public sector pay hardened significantly today. Treasury Chief Secretary Simon Clarke warned that “we do need to see restraint in pay bargaining otherwise it will get out of control” and signalled that staff won’t be offered real-terms pay rises.
“People have to recognise, if we’re going to forestall the evil of inflation – inflation destroys savings, it destroys growth, it damages any economy where it gets an endemic grip – then we are going to have to show collective, society-wide responsibility,” Clarke said.
Funnily enough, Clarke’s words were identical to those of Bank of England Governor Andrew Bailey. “We do need to see restraint in pay bargaining otherwise it will get out of control,” Bailey had said in February. His remarks were swiftly branded a “sick joke” by unions, not least because his own salary was nearly £500,000.
The curious thing is that, back then, No 10 joined in the backlash, too. “It’s not something that the Prime Minister is calling for. We obviously want a high-growth economy and we want people’s wages to increase,” the PM’s official spokesman said at the time.
Today, Clarke distanced himself from that spokesman. Indeed, the spokesman distanced himself from himself. In a handbrake turn on whether private firms should pay higher wages, he said: “Simon Clarke set out what the Government needs to take heed of. We are sure private companies will be taking heed of that as well.”
Confused? Well, that’s certainly how Tory MPs feel about their party’s overall economic strategy, or lack of one. Rishi Sunak has given the UK its highest tax burden for decades, yet still insists he’s a “tax cutting Chancellor”. Only last October (in his Tory conference speech), Boris Johnson chided private firms for relying on immigration to keep down wages and effectively urged them to pay more. Now, his Government is saying employers should keep a lid on any rises.
The confusion was laid bare in the PM’s spokesman’s own position today. “The Government wants a high wage, high growth economy,” he said. But then admitted that was more a longer-term “ambition” and right now tackling inflation was the priority. When asked if the No 10 stance amounted to “high wages, just not now”, he replied, “I wouldn’t put a time frame on it, given the variables we are experiencing at the moment, not least war in Europe.”
But I’ve discovered that there is one bit of the economy where the Government is very keen on letting pay go up: City bosses. I’ve been leaked an internal Whitehall letter, written by Johnson’s chief of staff Steve Barclay to Sunak, in which he announces No 10 wants current restrictions on bosses’ pay to be “removed” to show “the benefits of Brexit”.
The confidential letter shows that after intensive talks with Policy Minister Andrew Griffith, the No 10 Policy Unit and Minister for Brexit Opportunities Jacob Rees-Mogg, Barclay made a formal request to Business Secretary Kwasi Kwarteng to change the rules on corporate pay.
Outlining “deregulatory measures to reduce the overall burden on business”, the letter included this eye-catching proposal: “Removing restrictions on director (and specifically NED [non-executive director]) remuneration as suggested by the London Stock Exchange Group to improve London’s attractiveness for listings.”
I understand that among the changes being considered by the Department for Business, Energy and Industrial Strategy are amending the UK corporate governance code to allow non-executive directors – outsiders who oversee pay packages – to own more shares in that company.
Current UK rules – inherited from the EU – also include a cap on bonus pay, set at no more than 100 per cent of fixed pay or double that with explicit shareholder approval. They include “clawback” arrangements in case a firm finds reason to recall any salary, and the power of shareholders to know details of directors’ pay packages, so they can approve them or not.
All the restrictions were introduced by the EU in the wake of the 2008 financial crisis and although the Treasury didn’t particularly like them, they went along with them.
It was clear last August that Sunak could see what a political disaster it would be to tear up the bonus cap in the middle of a cost of living crisis. Treasury insiders stressed then that the issue was not a priority, no active work was being undertaken on the issue and anyway it was all a matter for the Prudential Regulation Authority watchdog.
(There’s also a Brexit irony at work here too. For many in the City, what they really want more than freedoms on banker pay is freedoms on who can and can’t work in the UK on short-term company transfers. More visas for foreign-born staff is their real ask.)
Another problem for the Government is the perception from business at home and abroad that it simply can’t be trusted to stick to any policy for very long.
One senior Tory MP, a former minister, told me: “This is a government whose unreliability on tax is up there with any third world country. We rule out windfall taxes, then we enact them. We say we won’t put up National Insurance or Corporation tax, then we do. Corporate planners plan years ahead, how can they believe this Goverment will do what it says?” The same problem may apply to any moves to ditch corporate pay rules.
A more fundamental difficulty is the confusion over what kind of Brexit Britain the Johnson Government wants. Does it really want to head down the low tax, low regulation model that depicts the City of London as a kind of Singapore-on-Thames? Or does the PM’s idea of a “Brexity Hezza” mean he is a high spending, statist in the mould of Michael Heseltine?
As Mayor of London, Johnson himself bitterly opposed the EU banker bonus cap. Will he now get his way?
In his party conference speech just nine months ago, Johnson boasted: “I am pleased to say that after years of stagnation – more than a decade – wages are going up faster than before the pandemic began.” Unfortunately, this month, real pay fell by 2.2 per cent – the lowest in a decade. To underline how huge banker incomes are, that average figure was turned into a 0.4 per cent increase in pay once bonuses were taken into account.
For a Government demanding wage restraint from nurses, doctors, teachers, bin men, bus drivers and rail workers, it still feels like a potentially massive PR disaster to simultaneously draft proposals that would let rich City types get even richer.
Removing the curbs on corporate pay is described in the Barclay letter as one of the “benefits of Brexit”. And there’s no doubt that some in the Square Mile and Canary Wharf believe that allowing greater freedom on directors’ pay will help London compete with New York or Singapore.
But for the millions who voted for Brexit in part to see their own wages go up, the contrast between their own falling incomes and moves to further boost the latest bankers’ bonanza may well be galling. Increasing City salaries to keep up with Wall Street wasn’t exactly the kind of “levelling up” they were promised in 2019.
Just as “Partygate” gave the lasting impression of a Downing Street that felt Covid laws were for everyone else but itself, letting rip on bosses’ pay risks sending a strong signal that wage restraint is for “little people” too.
“i stress, i dont believe economic equality is possible; indeed some measure of inequality is essential for the spirit of envy and keeping up with the Joneses that is, like greed, a valuable spur to economic activity.” – Boris Johnson
This feels like a good time to remind every other party that all they have to do at the next election is work together and then install PR and we will never have to deal with this Orwellian nightmare again.
Just when you think you can’t loathe the scruffy lying, cheating, incompetent little bastard any more, he always manages to make it happen.
How will he be restrain his working girls pay ???
Would carrie have rendered her service for £9.50 an hour ????
If they remove bonus restrictions doesn’t that mean that corporations on public sector contracts can cream off any amount of money they like as bonuses for directors?
So ministers coming out and saying fuck off and don’t be selfish asking for a pay rise because it’s going to cause inflation, then – but we’re going to boost bankers pay to show Brexit benefits.
Well isn’t that nice.
It’s almost as is…bare with me on this point…that the Conservative party only think of themselves and the rich.
Must be wrong though, would do thay would they?
Woah woah this is nothing to look at. hey look there’s someone earning like 30k, get em!!!
Perhaps the theory is inflation does not happen with a few people being richer but only if the en masse is richer?
That creature and most of its party needs put in jail.
I pray to any Gods that listen, to make sure the strikes due bring this Government down like the 70’s when they last tried to hold back wages and public sector rises. Yeah it was an awful time, power cuts galore, no deliveries coz no lorry drivers, NHS out on strike, dustbins overflowing but the Winter of Discontent did its job and got rid of Callaghan and his insanely divided Government/Party. Unfortunately, it let in Thatcher but hey ho swings & roundabouts
I’m pretty sure that if the Tories thought they and their friends could keep getting rich and still have a nice life they’d euthanise the rest of the population.
I would like to remind folks of tis from January [https://youtu.be/TzDCmrWOr5Y](https://youtu.be/TzDCmrWOr5Y) this was the fraud prevention ministers resignation speech in the HoL, We are now offically in a kleptocracy.
Hang on a minute, I thought one of the main points of Brexit was to remove cheap EU labour and therefore drive up wages of everybody else. This narrative was being spouted by the government and their newpaper shills up until very recently.
Now all of a sudden the government are trying to surpress wages after the cheap EU labour has been banished? What the actual fuck is going on? This is some next level gaslighting of the public.
Its almost as if the whole Brexit concept was a scam and that the government has absolutely no idea how to handle the inevitable fallout…*almost*
I wonder if the poor people who lap up everything this government says they I’ll ever realise they are not for them!!
Of course, London bosses NEED that boost. They can’t be expected to just live on their hundreds of thousands to millions per year. The peasents can.
​
I am reminded of Ancient Rome. Even then, Rome was kinda fairer to it’s citizens and you had a decent chance of making a quite of bit of cash if you joined the army and it was campaigning.
No 10 wants current restrictions on bosses’ pay to be “removed” to show “the benefits of Brexit”.
Shame the average guy will never hear anything about this.