Chuka Umunna: Labour Calls For ‘New Capitalism’ to Confront High Executive Pay

The shadow business secretary, Chuka Umunna, has launched Labour's strongest sign yet that it will change capitalism "as we have known it" if the party is voted into office at the next general election.

Speaking to the Icaew and the High Pay Commission, Umunna, attacked high executive pay saying that it had become a "reward for failure".

Criticising the bonus culture, that has caused a storm between the average worker and top executives in Britain following the economic crisis, Umunna said: "We must look at what a bonus is used for. They should be something special, infrequent and not seen as an entitlement."

Umunna suggested that as a result business and society are more divided now than ever before. "Businesses need to show that they are a force for good," he said.

"There is a belief that business and society are separate but nothing could be further from the truth. High executive pay are bad for the companies, bad for the economy and bad for society."

He added: "If a six figure salary is not enough of an incentive for an executive to perform their best, then maybe the company has not got the right person.

'Entrepreneurial' Pay

Umunna attacked the executive pay increases which have been disproportionate to the increase in value of the company.

He said: "The average increase of a FTSE 300 company has been eight percent. The average increase of an executive has been 108 percent.

"There must be a mutual trust between society and the owners of these business who seem content paying these sums of money to people who do not warrant the salary."

The idea behind the bonus pay scheme was to make the chief executives "entrepreneurial minded".

"But in today's society, these people do not have their own money or livelihood on the line. It is the people at the bottom who are risking everything," he said.

Leadership Challenge?

Umunna, only 18 months into his first term as an elected MP, has risen quickly through the ranks and is often sent to talk up new Labour policies with the media.

In a difficult week for the Labour leader the speech contained many supportive remarks for Ed Miliband who has had his management style attacked from many quarters of the media.

Dubbed the 'British Obama', Umunna said that maybe his appearance here could also be an omen for his own personal future.