Nick Clegg vows to get tough over excessive executive pay

HAS NICK CLEGG finally found a way back into the nation's heart? In vowing to do something about excessive executive pay, he has not only backed a popular cause, he has also addressed a subject which is causing real concern among politicians, sociologists and - in some cases - the very rich themselves.

There seems little doubt that the growing gap between the super-rich and those on ordinary incomes is creating a sense of injustice that the Government must tackle.

An OECD report issued this morning shows that "income inequality" has increased in Britain since the mid-1970s faster than in any other rich nation, mainly because of the rise of the financial services "elite". Just before the banking crisis of 2008, the top 0.1 per cent of earners accounted for a stunning five per cent of Britain’s total pre-tax income.

Anecdotal evidence reaching TheWeek.co.uk suggests some very wealthy people are even leaving the country because they fear that the anger displayed in the summer riots could be easily rekindled and that, next time, "the mob" could be at their gates rather than fighting with police and looting city centre stores.

Clegg put down his marker on yesterday's Andrew Marr Show when he vowed that ministers would publish firm proposals in January in a bid to limit executive pay and that he was willing to legislate if that proved the only way to force private sector companies to take note.

"I think we need to make sure that people in the public sector do not feel that they are doing all the heavy lifting, that people who are in a sense living by completely different rules in the private sector are also held to account," he said.

He said a recent report showing FTSE 100 company bosses getting pay rises of up to 49 per cent even through their companies were not doing particularly well was "a real slap in the face for millions of people in this country who are struggling to make ends meet".

Clegg said he was not opposed to people being paid well if they succeeded. "What I abhor is people who get paid bucketloads of cash in difficult times for failing."

As The Guardian reports, Clegg offered Marr three pointers as to how the Government might impose pay reform:

1. Shareholders could be encouraged to exercise their right to limit executive pay.

2. Companies could be forced to bring the entire staff into the decision-making process by putting workers on remuneration committees.

3. Companies could be forced to disclose the pay gap between the highest paid and the average employer.

It is the latter proposal that goes to the root of so much anger about executive pay – the feeling that rewards at the top of the tree have gone mad.

Where only a generation ago the best paid person in the company might typically have been paid 10 - 20 times the average employee, today it might be 100 times.

To be specific, a High Pay Commission report published last month showed that in 1979 the senior executive at BP earned 16.6 times what the average employee of the oil company received. Today, he earns 63 times. At Barclays Bank, the ratio was 14.5 in 1979. Today it is 75.

Clegg's timing – the weekend after the biggest public sector strike in a generation - is no coincidence. As The Times reports, there is concern among Lib Dems that David Cameron and George Osborne “overdid the rhetoric" against public sector workers last week.

As Clegg told Marr, "It's important to the country we don't divide - it's not public versus private, north versus south, employer versus employee." ·