High Pay Centre Faces Closure, Signalling Shift in Social Research Funding

Shock ricocheted around the world of social research this week with the sudden news of the imminent closure of the High Pay Centre (HPC).

Founded in 2011 by the former Guardian business editor Deborah Hargreaves to focus on analysis of extreme pay at the top and the widening pay gap between CEOs and their average employees, its closure feels like the death of an idea.

Others campaign on tax and redistribution but the HPC was concerned with “predistribution”. It was unique in looking at the origins of inequality in pay and control over pay rates. Its annual report is always covered, even by rightwing media, because each year it reawakens a sense of disbelief at the way we live now. Why would the median FTSE 100 CEO need £4.4m this year to do his (yes, mostly still his) gratifyingly high-status job? Why?

There will be no more HPC reminders of “high pay day”, well-reported as “fat cat day”. This year it calculated that it took the median FTSE 100 CEO less than two and a half days in January to be paid what a median full-time employee earns in a year. It shocks, it’s put aside, forgotten, then amazes all over again each year.

The HPC kept reminding us that UK incomes are the second most unequal among rich countries, outstripped only by the US. It was forensic in analysing how our corporate governance system underpins this great dysfunction. Britain is an outlier, with no nod towards democratising boards. No FTSE 100 company has appointed a worker director to its board, while in 13 EU countries plus Norway employee representation is not only socially expected, but legally required in “co-determination” models. A lack of that voice at the top means just 55% of the FTSE 100’s largest companies pay the living wage advocated by the Living Wage Foundation. There is something about directors eyeballing an employee on ordinary pay around the top table that makes it harder for remuneration committees to award these stonking great salaries and bonuses. But now, an organisation devoted to examining these very causes and distortions of obscenely high pay is gone.

What happened? HPC is the first victim of aggressive action taken a year ago by Aberdeen Group, the wealth management and investment company; it abruptly terminated its Financial Fairness Trust, which had funded a host of invaluable research organisations, sacking its CEO and trustees overnight. Many beneficiary organisations I have spoken to that relied on it are still reeling from the loss.

This remarkable trust was founded with a £90m windfall of unclaimed assets from the demutualisation of Standard Life in 2016, with the former Labour chancellor Alistair Darling as its founding chair. Its admirable purpose was “to fund research, campaigning and policy work aimed at making the UK financially fairer for people on low to middle incomes”.

Beneficiaries included the Institute for Fiscal Studies (IFS), the Resolution Foundation, the Royal United Services Institute, Bright Blue, the New Economics Foundation, Centre for the Analysis of Taxation (CenTax), the Child Poverty Action Group, Transport for All, funeral poverty research by Quaker Social Action and consumer research by Which? This money was, said Paul Johnson, then the outgoing IFS director, “a crucial part of the UK’s research funding infrastructure focused on improving the financial security of those on lower incomes”. He spoke ruefully of billions of pounds for scientific research but a pittance for social research. “We have no Large Hadron Colliders.” Most social research is funded by the Economic and Social Research Council and the Nuffield Foundation but, he said after the demise of this trust, there are “no significant others”.

Alistair Darling died in 2023, rescuer of the UK economy in the crash, a great loss to so many causes. Sadly he wasn’t there to defend the Financial Fairness Trust when Aberdeen axed it last summer, declaring in that familiar dread phrase that it was “moving in another direction”. The charity, now renamed the Aberdeen Group Charitable Trust, reopened this spring. It no longer researches inequality, but supports nature in the community and helps people into work. Good causes, albeit with no social justice bite.

What was all this about? In the wake of Donald Trump’s corporate crusade against “woke” diversity, equity and inclusion, US giants such as Meta, Walmart and McDonald’s rapidly dismantled diversity aims. For fear of losing US business, UK companies followed suit: People Management reports more than half of businesses changed their approach to diversity, equality and inclusion last year. The terms DEI and ESG (environmental, social and governance) vanish from annual reports or fade into general HR, relabelled “opportunity” or “merit-based” practices to avoid political pushback. Aberdeen plainly took fright at a foundation actually devoted to fairness. Last month, Kemi Badenoch, following the American way, committed to abolishing the public sector equality duty (PSED) that requires public authorities to consider how their policies can promote equality.

As for Aberdeen, outrage had no effect, even when the mighty Martin Lewis objected. David Norgrove, who chaired the Financial Fairness Trust after Darling, was incandescent, but he couldn’t save it, though he was former chair of the UK Statistics Authority, the Pensions Regulator, the Low Pay Commission and much more. “Shoddy behaviour,” he told me that day. “Abrupt, rude, ungracious.” This would, he predicted, “be damaging to them”.

Well, was it? Did their shareholders revolt? Were their shares sent tumbling? No, that’s rarely how the world works. Aberdeen Group has had a very good year indeed. It reported last month on “continued strong momentum across the business”, expecting the second quarter “to achieve record net flows in excess of £3.7bn”, a 50% increase on Q2 last year.

In two weeks Andrew Speke, long time number-cruncher and analyst at the High Pay Centre, its last employee, closes its door with its final report, which will reveal CEO pay at its highest, and the gap with median employees at its widest. At the last moment, will someone step in? Patriotic Millionaires, horrified at the news yesterday, said it immediately put HPC to the top of the list for its members of suggested causes in need of urgent donation, so maybe some of them will step up. If not, top CEOs will be saved from a little very mild embarrassment once a year on fat cat day.