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governance code to be updated to codify current best practice whereby companies make a statement when a significant minority of shareholders vote against a pay resolution. This will publicly hold directors to account. Pay reports will be clearer and more transparent for investors. Companies will have to report a single figure for the total pay that directors received for the year, details of whether they met performance measures, and a comparison between company performance and chief executives’ pay.

The Government will shortly bring forward amendments to the Enterprise and Regulatory Reform Bill to introduce these reforms. In tandem, as good policy-making requires, we will publish for comment revised, simplified regulations setting out what companies must report on directors’ pay.

Lasting reform is dependent on business and investors maintaining this activism and developing and adopting good practice. The best companies and investors are already leading the way and acting as early adopters of these reforms. We welcome the close engagement of institutional shareholders and their willingness to use their voting powers. We want this to be sustained and we shall continue to monitor disclosure levels. Evidence suggests that more institutional investors are disclosing their voting records and that up to three quarters of these investors are now disclosing their votes. We will consider further action if the number of investors volunteering to disclose their voting records does not continue to increase.

In summary, this is a strong package of reform. It builds on the UK’s status as a global leader in corporate governance, it commands wide support from investors and business, and it addresses public concerns about directors’ pay. These proposals restore a stronger, clearer link between pay and performance; reduce rewards for failure; promote better engagement between companies and shareholders; and, overall, empower shareholders to hold companies to account through binding votes. We look forward to discussing the proposals further with the Business, Innovation and Skills Committee on 28 June and in the Public Bill Committee that will consider the Enterprise and Regulatory Reform Bill.

12.43 pm

Mr Chuka Umunna (Streatham) (Lab): I thank the Secretary of State for advance sight of his statement.

In the past decade, the value of FTSE 350 companies increased by 80% while the average total earnings of executives in those companies increased by 108%. So the evidence is clear: many of these rewards, as the Secretary of State said, are not linked to success or performance. This problem has grown over the past few decades under Governments of all persuasions. In fact, one has to go back to 1979 to find things more in proportion, with executive pay growing by 0.8% on average in the three decades since that year. It is imperative that we all do what we can to address this problem.

In government, rightly, we did not rush to legislation. It was right to see whether legislation could be avoided. When it became clear that that was not the case, in 2002 we made it mandatory for quoted companies to publish a separate directors’ remuneration report, and we gave shareholders the right to vote on remuneration through advisory votes. As the Secretary of State said,