Paddy Tipping MP: Act on greed and injustice

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Labour MP Paddy Tipping makes the case for his Maximum Wage Bill, which is being considered in the Commons.

In the 10 years since the minimum wage was introduced, it has proved to be an enormous progressive force – landmark legislation from the Labour government.

Introduced in 1999 at a rate of £3.60, it gave over two million workers an immediate pay rise. Millions more have benefited every year as the rate has increased by almost 60 per cent over 10 years to the £5.80 planned this October.

Despite dire predictions, jobs have not been lost. There is still opposition - senior Conservative MP Christopher Chope plans to axe the minimum wage through his Employment Opportunities Bill due to receive a Second Reading on June 12.

But now is the time to complete the circle by examining the concept of a maximum wage. In an unprecedented time of international, economic difficulty hard working families are struggling just now. They have concerns about executive pay packages, a bonus culture and gold plated pensions.

Companies like Tesco, BP and Vodafone now have six or more directors taking bonuses worth more that £1m. Around 200 directors of FTSE companies are earning over £1m. Even those in the City are complaining that executives are receiving bonus payments for failure rather than success.

What's more, there's real public anger about the annual pension payment of £730,000 for Sir Fred Goodwin in circumstances when he should have been sacked not rewarded.

Outside the Westminster village, away from the political classes, there a growing demand for openness, fairness and justice.

There's a lot of academic work about a maximum wage but it doesn't receive the political focus it deserves. Signs are now emerging that it is beginning to happen. Interestingly, President Obama has floated the idea of putting a cap on US executive's salary where state bailout money has been taken.

Part of the debate is how we should define the cap. A simple solution would be to restrict the maximum wage to the salary of the prime minister at £194,250 a year, but there are better and fairer solutions.

Why not restrict the level to a multiple of the minimum wage – perhaps 100 times the minimum wage? This would compress the pay structure but allow flexibility.

Alternatively, the maximum wage could be linked to the average wage - £479 a week in April 2008. In this context we should remember that the top 10 per cent of earning distribution earned more than £946 per week, while the bottom 10 per cent earned less than £262.

As MPs we need to recognise that voters abhor greed and injustice. We need to turn outward and listen. A debate about a maximum wage will prove to be a vehicle for change.