On Sunday the Prime Minister announced that excessive pay for company bosses would be a thing of the past, revealing Government plans to make shareholder remuneration votes mandatory. He also attacked ‘crony capitalism’ – a snappy new moniker – which describes the actions of an elite group of corporate executives who sit on each other’s boards and set one another’s salaries.
The story was dutifully followed up on Monday’s Today programme with Deborah Hargreaves, chair of the High Pay Commission, confirming that some FTSE bosses are now earning 160 times average pay.
It is unusual for a Conservative-led Government, whose principals hold an inherently free market philosophy, to be pushing for pay caps, but this is part of a pragmatic comms approach by the Tory leadership.
First, Cameron needs to appease his Liberal Democrat coalition partners who are still feeling bruised after last month’s European treaty veto. In particular, Business Secretary Vince Cable has been arguing fiercely for moderation and simplification of corporate pay packages.
Even more importantly, the PM recognises the need for a distraction from the gloomy economic news. Better to find an imaginary scapegoat – fat cats – than take all the flak for further budget cuts as retailers go bust and household incomes are squeezed.
The attack on boardroom pay is well supported by the electorate; it bolsters the faltering ‘we’re all in this together’ line of last year.
Third, and most powerfully, the strategy undermines Ed Miliband’s position. One would expect the Labour leader to be driving such policies, so taking this ground erodes Miliband’s already dwindling confidence.
But the whole enterprise could easily backfire. Cameron faces strong opposition from the sort of pro-business pressure groups – the CBI, the City of London Corporation – that are natural Tory allies. Moreover, as austerity Britain bites this year, emotions over financial fairness and pay equality will be heightened.
As I write, the i newspaper’s front page features a smug Christmas picture of RBS boss Stephen Hester sporting full hunting gear. The headline points out he is due a huge bonus – despite RBS’ massive losses, appalling reputation and the fact the Government is its largest shareholder.
The British electorate is so furious about the damage highly paid bankers have done to the economy that this may prove a difficult narrative to control.