The business secretary announces proposals to give shareholders more power and increase transparency in executive pay. But a policy expert tells Channel 4 News the plans don't go far enough.

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Vince Cable told MPs that he wants shareholders to have the power to veto excessive pay or redundancy packages for shareholders.

He said that it was it was not up to Westminster to "micro-manage" companies but instead, that government could take steps when there was "clear market failure".

The business secretary had planned to announce his proposals for a crackdown on executive pay in a written statement to the House of Commons on Tuesday before discussing it greater detail during a speech at the Social Market Foundation in London.

But the parliament Speaker John Bercow granted shadow business secretary Chuka Umunna an urgent question this afternoon, after Labour argued that Mr Cable would otherwise avoid the scrutiny of parliament on his "half-baked proposals".

Greater transparency

Mr Cable's main proposals focused on greater transparency on executive pay, where companies would be required to publish detailed remuneration reports, as well as greater and more binding powers for shareholders.

He also said government would ensure boards and remuneration committees were more diverse, and said the government would introduce "clawback" policies to allow companies to take back bonuses if they proved to be undeserved.

But the business secretary warned there was "no magic bullet" for tackling the problem.

Mr Cable faced a backlash from Conservative colleagues who were highly vocal in their criticism of the proposals.

Tory MP Peter Bone called them "liberal, left-wing claptrap" while Philip Davies MP was equally scathing: "I have heard some drivel in my time but I don't think that in all my years in opposition I have heard as much drivel from the front bench as I have heard from you today.

Can I suggest that you get off your backs and let them [businesses] create some wealth and you spend your time in your department trying to sort out some of the massive problems that we face without interfering in every business in the country? Tory MP Philip Davies

"Businesses look to your department for support and help," he added. "Can I suggest that you get off your backs and let them create some wealth and you spend your time in your department trying to sort out some of the massive problems that we face without interfering in every business in the country?"

Labour leader Ed Miliband has previously called for employees to have a place on remuneration committees, and for companies to publish the ratio between executive and the median pay of employees.

In response to Mr Cable's statement, Labour's Chuka Umunna agreed that hard work, which generates wealth and creates jobs, should be rewarded. "But, of course, excessive pay and rewards for failure are bad for business, the economy and society at large," he said.

"I welcome much of what the business secretary has said, but his proposals simply do not go far enough in promoting the transparency, accountability and fairness that people want to see."

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Representation on company boards

Mr Cable also proposed that company boards should have a wider range of representation, for example academics or professionals from other industries.

Kayte Lawton, senior research fellow at think tank, the Institute for Public Policy Research (IPPR) told Channel 4 News that employees on remuneration boards would have a greater impact on reducing executive pay.

"The problem with [an independent representative] is firstly, that they're often themselves quite highly paid so are part of that culture that says high pay is important," she said.

"Secondly, there is no-one they have to hold themselves accountable to."

However, speaking on Monday morning, David Cameron said that putting workers on remuneration committees was not the solution.

"I think the answer is to empower the shareholders, to have much more transparency, to have clear votes on pay packages and, particularly, to make sure people can't get these rewards for failure, where some executives who do not perform well get massive pay-offs," he said.

"Those are the things we need to stop and that's the action that will be taken."

Median employee pay

Ms Lawton welcomed the move towards making executive pay more transparent, "but I'm particularly keen that as well as publishing top pay, companies should publish median wages of employees so you can make some comparison," she said.

"A good argument for doing that is so that you can compare companies within the same sector and use differences to pick up those companies where there is a big discrepancy."

IPPR analysis into executive pay and performance found that executive pay increases are not in line with company profit: from June 2010 to March 2011, the report found that bank bosses enjoyed an average increase in remuneration of 81 per cent, but the value of the five banks in the study rose by 19 per cent.