Cap organisation pay ratios at 10:1: calculation note

Central fiscal result

+£1.2bn - Net public-finance impact in 2027-28

Low case: -£0.5bn. High case: +£5.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Limit highest total remuneration to ten times the lowest full-time-equivalent pay in each organisation.
• Baseline is current law and published official data unless stated.
• Private business costs are excluded unless they affect tax or procurement.
• Target year is 2027-28, with later years shown separately.

Affected population

• Unit is organisations and remuneration, not jobs.
• Existing reporting covers quoted firms with more than 250 UK employees.
• FTSE 100 CEO pay is a scale check only.
• Full affected pay base needs HMRC and company data.

Gross impact

• FTSE 100 CEO excess above 10:1 is roughly £0.4bn before wider executives.
• Central affected high-pay remuneration is scaled to £3.0bn.
• Effective PAYE, employee NI and employer NI loss is £1.80bn.
• Lower-pay rises and corporation tax offset about £0.65bn.

Fiscal build-up, central case

• Lost PAYE and employee NI: +£1.35bn
• Lost employer NI: +£0.45bn
• Corporation tax offset: -£0.35bn
• Bottom-pay tax and benefit offset: -£0.30bn
• Compliance and litigation: +£0.10bn

Central net impact: +£1.2bn in 2027-28.

Behaviour and pass-through

• Low case assumes firms mainly raise bottom pay.
• Central assumes mixed top-pay cuts and avoidance.
• High case assumes relocation and reward redesign.
• Outsourcing low-paid work can weaken the cap.
• Share and partnership income can change receipts.

Phasing

• 2026-27: +£0.2bn. Design and avoidance planning.
• 2027-28: +£1.2bn. First binding year.
• 2028-29: +£1.4bn. Restructuring increases.
• 2029-30: +£1.6bn. Avoidance patterns settle.

Main source groups

• BEIS, "The Companies (Miscellaneous Reporting) Regulations 2018: Q&A" (2018): Quoted companies with more than 250 UK employees already disclose pay ratios; provides the reporting baseline before a binding cap.
• High Pay Centre, "Fat Cat Day 2026" (2026): The High Pay Centre reports median FTSE 100 CEO pay of about £4.4m; sizes executive-pay exposure, but not full-economy remuneration.
• HMRC, "Rates and thresholds for employers 2026 to 2027" (2026): HMRC thresholds define income tax, employee NI, employer NI and statutory-pay recovery; used for tax and statutory-payment offsets.
• Farber, Herbst, Kuziemko and Naidu, "Unions and Inequality Over the Twentieth Century" (Quarterly Journal of Economics, 2021): Unionisation historically reduced wage inequality, partly by compressing pay within and across workplaces; explains who may gain from collective-bargaining reforms.
• DiNardo, Fortin and Lemieux, "Labor Market Institutions and the Distribution of Wages, 1973-1992" (Econometrica, 1996): Labour-market institutions can compress wage inequality through wage floors and bargaining power; useful for distributional channels, not for claiming free fiscal gains.
• Green Party of England and Wales, "Workers' Charter 2026" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.