Government under fire over plans to reduce wage controls for city bosses

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The government has come under fire for its plans to reduce controls on city bosses’ wages while advocating for wage moderation in the public sector.

The Cabinet Office minister is said to have written to the Chancellor with a plan for “deregulatory measures to reduce the overall burden on business” and to attract more businesses to the UK after Brexit.

This would mean lifting restrictions on executive and non-executive directors’ pay, according to a leaked copy of the letter the newspaper has seen.

“I trust you will agree that this is a more proportionate regulatory response and reflective of the new approach to regulation outlined in the January ‘Benefits of Brexit’ publication,” it said.

It is right that we reward our hard-working public sector employees with a pay rise, but this must be proportionate and balanced

The paper reported that Steve Barclay asked Secretary of State Kwasi Kwarteng to outline further measures to ease the burden on business, making explicit reference to the need to change limits on bosses’ wages.

The Department for Business, Energy and Industrial Strategy (BEIS) confirmed it is investigating “whether there are undue restrictions on paying non-executive directors in stock, which can ensure that they are fully invested in the success of the company they run.” run”.

“When the company does well, the drivers do well,” it added.

It comes at a time when the Prime Minister and Chancellor have argued that discipline and restraint on public sector wages are now important to contain downward inflationary pressures.

“We have a responsibility to tackle inflation and prevent it from becoming entrenched,” said No. 10.

“To do this, we need to make sure wage arrangements are sensible and don’t scramble to match inflation, and as a result drive prices up as the cost of goods and services rise to include wage increases.”

Ahead of a cabinet meeting on Tuesday, the Prime Minister said: “It is right that we should reward our hard-working public sector workers with a pay increase, but this must be proportionate and balanced.

“Continued higher levels of inflation would have a much greater impact on people’s wages in the long run, wiping out the savings and prolonging the problems we face.”

On Monday, the Treasury’s chief secretary called for “public sector wage discipline” and “collective social responsibility” to prevent a 1970s-style wage-price spiral.

The Bank of England last week predicted inflation would hit 11% in the autumn, when interest rates were raised to 1.25% – the fifth consecutive rise.

The Labor leader in the House of Lords, Baroness Smith, accused the government of using “two sets of rules”: one for high-income earners in the city and another for workers elsewhere.

She told colleagues: “On the one hand, we tell those who work that you should have wage moderation. Doesn’t it seem a bit hypocritical to tell the city that those restrictions, those barriers that were there, need to be removed?

“Gentlemen, the bottom line is that the government seems to think the rules are for other people, but not for them and their friends.”

Shadow Business Secretary Jonathan Reynolds said: “It is the hallmark of a government that swings from crisis to crisis that instead of giving companies real security, they look down on arbitrary ideas on the bench.

“If this is what an audit of four years, three consultations and thousands of pounds of taxpayers’ money has brought us, then it is clear that the Tories are incapable of governing.

“The Conservatives should do everything they can to make Brexit work by plugging the holes in the government patchwork. Labor will work with businesses to help create a stronger, safer economy.”

A BEIS spokesperson said: “As announced last month, we are looking to strengthen rules for recovering bonuses from executives if their company collapses to stamp out ‘rewards for failure’.

“In the same vein, we are also investigating whether there are unnecessary restrictions on paying non-executive directors in stock, which can ensure that they are fully invested in the success of the company they run. If the company does well, the directors do well.”