We were talking about remuneration and how it contributed to the financial crisis. We were also talking about some of the principles that we should apply in future to ensure that remuneration does not contribute to instability.

Under the Financial Service Authority’s remuneration code, being taken forward under the Financial Conduct Authority, between 40% and 60% of bonuses need to be deferred and at least 50% must be paid in shares or other long-term instruments. That means that the up-front cash element of bonuses is now limited to between 20% and 30%. Bonuses, in any event, are down by 80% since 2007. From 1 October this year, a binding shareholder vote will be required on executive pay. Since the financial crisis, we have put in place measures that make the United Kingdom one of the more rigorous regimes in the world regarding remuneration policy.

New Clause 6 would require shareholders to vote on remuneration consultants appointed to advise board remuneration committees. The Government consulted on such a proposal last November, but it attracted little support from shareholders. The feedback from the consultation is that that would introduce bureaucratic requirements without any particularly valuable benefit.

Shareholders who responded to the consultation said that greater transparency is needed regarding the appointment of consultants to advise remuneration committees. We will therefore amend the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to require future remuneration reports for quoted companies to state: whether anyone has provided advice to the remuneration committee; if so, who; whether that person or body has provided any other services to the company; who appointed the group or individual; how they were selected; the cost of that advice; and the basis of payment.

We will lay regulations in the coming months and ensure that the provisions come into effect from October 2013. They will go further than we have done and give shareholders more information than ever before, without micro-managing their responsibilities. That is in the context that from October, there will be a new vote on the proposal for remuneration anyway. Our plan is consistent with the outcome of the consultation, and I hope that the hon. Member for Kilmarnock and Loudoun will find that it meets the spirit behind new clause 6.

New clause 7 would require companies to have an employee representative on remuneration committees. It is important that such committees make their decisions based on a wide variety of information. Companies and shareholders may, if they want to, have an employee representative, but at the moment they are not compelled to.

Our approach is not in any way to resist the idea that the opinions and experience of employees should be made available to boards and remuneration committees in making their recommendations; it is based on transparency. I have said that we will table amendments to the 2008 regulations on disclosure. Some further changes that we will make include requiring companies to disclose whether and how they have sought employees’ views on pay and to publish that in directors’ remuneration reports. They must say how they have taken into account the pay of existing employees in making pay decisions.

New clause 10 would require the Government to introduce proposals for incentives to take into account performance and stability over a five to 10-year period. Again, I think all of us would recognise and reflect on the fact that some of the very short-term rewards and bonuses contributed to excessive risk-taking in the last financial crisis, and that was in the interests of neither shareholders nor taxpayers. The Financial Services Authority’s remuneration code as it was drafted, now being taken forward by the Financial Conduct Authority, reflects the global Financial Stability Board’s principles for sound compensation practices. This requires variable remuneration for risk-takers to be deferred for at least three to five years, and to be subject to a retention period on vesting.

The difficulty with new clause 10 is that the period of deferral should clearly reflect the type of business that is subject to these provisions. For example, some funds come into existence and are wound up, and their business is completed in less than five years. In those circumstances, the correct alignment of incentives would be with the life of those funds.

In the case of other organisations and individuals, such as the directors of banks—ring-fenced banks, in particular—it is appropriate to consider career deferrals of bonuses, to reflect the long-term financial stability objectives. Some firms have gone beyond the minimum  specified in the remuneration code, reflecting the global Financial Stability Board’s principles. For example, HSBC has favoured deferral of bonuses until retirement in some cases. How the implementation of the code is being taken forward very much has this issue in mind. The minimum period is there to reflect the different circumstances, but already we see that people are making more informed choices as to how vesting takes place.

In the discussions that we have had around capital requirements directive IV in Europe, we have insisted that bail-inable debt should be part of variable pay. It seems to be a good and useful thing that if in future there is to be debt that can be bailed in, executives should be rewarded in that, so that their interests are again aligned with those of other stakeholders in the company. Of course, if the Parliamentary Commission on Banking Standards should come up with any further recommendations on pay, we will certainly consider them; we will have the opportunity to do so in this House and the other place.

I hope that the hon. Lady will feel that the additional measures that we are taking on remuneration address the substance of her concerns. At the moment, we have the most rigorous jurisdiction for pay in the world, but we want to go further and make it tougher. In particular, the implementation of both the code and CRD IV will give us the opportunity to keep this matter under review and to ensure that the problems of the past, when pay and remuneration structures actively contributed to financial instability, can never happen again.