The chair of an influential House of Commons committee has urged the Prime Minister to make good on her promise to crackdown on “unscrupulous” company bosses by imposing billion-pound fines.
Labour MP Frank Field, who heads the Work and Pensions select committee, called for regulators to put “the fear of God” into company chiefs.
In the wake of the collapse of Carillion, which held around 450 public sector contracts, Theresa May has vowed to introduce tough new rules to end the “unacceptable abuse” by irresponsible business chiefs.
The construction and outsourcing giant – which employs 43,000 people – was left mired in £1.3bn of debt and saddled with a £600m pensions deficit after going into liquidation this week.
Thousands of suppliers and subcontractors owed money have been left in limbo and seen work paused on building sites, prompting anger over pay awards enjoyed by the firm’s bosses.
Video: Frank Field says those who mismanage companies should suffer
Writing in the Observer, the Prime Minister said top executives had too often reaped “big bonuses for recklessly putting short-term profit ahead of long-term success”.
“In the spring, we will set out new tough new rules for executives who try to line their own pockets by putting their workers’ pensions at risk – an unacceptable abuse that we will end,” she wrote.
“By this time next year, all listed companies will have to reveal the pay between bosses and workers.
“Companies will also have to explain how they take into account their employees’ interests at board level, giving unscrupulous employers nowhere to hide.”
Speaking to Sky News about the Prime Minister’s promise, Mr Field urged the Government to consider huge fines on company bosses who rack up large pension deficits.
“One would hope, of course, that one wouldn’t have to levy the fines,” he said.
“The mere fact that they’re there and that we would have a pension regulator who really just puts the fear of God into people to behave properly.”
Image: There has been anger over the pay awards enjoyed by Carillion bosses
During the collapse of BHS, Mr Field said his committee proposed fining the company’s former owner Sir Philip Green £1bn, due to the high-street chain’s multi-million pound pensions deficit on its demise.
“I would have thought – given that these fines would be levied on the individuals, not on the companies, with the aim of actually stripping out peoples’ personal wealth who have gained so much and behaved so poorly in the stewardship of their company – would have helped concentrate minds wonderfully,” Mr Field said.
The former welfare minister also questioned the role of the pension regulator in the collapse of Carillion, as he demanded a regulator that is “really proactive”.
A task force involving businesses and trade unions has been set up to support companies and workers affected by Carillion’s collapse.
The Prime Minister used her newspaper article to insist the state had a “role to play” when companies fail but “not by bailing out the directors with a blank cheque”.
Video: Liz Truss defends the Government over Carillion
Labour have seized on the firm’s demise to repeat their call for private-public partnerships to be brought back under Government control.
But Liz Truss, the Chief Secretary to the Treasury, pushed back against Labour’s calls for the recall of Private Finance Initiative (PFI) contracts.
Shadow chancellor John McDonnell dubbed such schemes “wrong” on Sunday, with his party also promising to renationalise major industries.
Ms Truss told Sky News: “People shouldn’t think there’s some magic alternative.
“If politicians end up running companies as John McDonnell is proposing, that would mean huge liabilities on the public balance sheet.
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“It would mean that those losses would all come to the taxpayer.
“I don’t think we want to live in a country where politicians run major companies and all of the impact that that would have.”