On Fat Cat Day, a short history of why the rich keep getting richer – and what can be done about it

New Labour were 'intensely relaxed' about people getting 'filthy rich', while David Cameron dropped the top rate of tax to 45 per cent. But what would a Jeremy Corbyn government do about executive pay?

I'm sure Fat Cat Day moves closer to New Year every passing year. Is it a trick of perception, or a consequence of galloping executive pay? The High Pay Centre reported in advance of last November's Living Wage Week that FTSE 100 companies saw chief executive remuneration reach an average of £4m a year, while 61 of the very same firms were not even accredited Living Wage employers. In Stoke-on-Trent where I live, Denise Coates of Bet 365 “earned” a base salary of £220m, with a share dividend top up of £45m – firmly throwing the FTSE fat cats into the shade.

It's been nearly 25 years since then British Gas chair Cedric Brown provoked public outrage with his £205,000 pay rise, and yet salary packages at executive level have mushroomed to even greater levels. Still, isn't this a private matter for shareholders only?

As Richard Wilkinson and Kate Pickett argued in their seminal 2010 book, The Spirit Level, regardless of how wealthy a society is, the more unequal it is, the more likely its people will suffer poor mental and physical health, and reduced life expectancy. And this applies across the board. Even wealthy people live healthier, longer lives in more equal countries than those who reside in unequal ones.

It's not difficult to understand why people are annoyed at excessive pay, particularly as wage growth has flatlined for the last decade. Yet with the social cost of inequality well understood in policy circles, why has nothing been done to curb it? In the mid-90s, Tony Blair and New Labour certainly rode the wave of revulsion against high pay, but they were very careful to frame it in narrow terms.

The anger against the likes of Cedric Brown was a consequence of excessive profits of the privatised utilities, rather than a symptom of a wider snouts-in-the-trough culture. It was only fair these bad apples should be singled out for tough treatment. And so to capture the mood a one-off windfall tax on these businesses was promised and implemented, ostensibly to get 250,000 young people into work. However, dealing with high pay general smacked too much of the late and unlamented old Labour and so was allowed to prosper. After all, it was no lesser luminary than Peter Mandelson who declared that Labour was intensely relaxed about people getting filthy rich, just so long as they paid their taxes.

Following the 2008 financial crisis Labour under Gordon Brown eventually came round to putting up the top rate of income tax, but more as a political trap for David Cameron than a deep seated desire to address the problem. And what did the Coalition government do? Not a great deal, despite the “all in it together” austerity rhetoric and the Big Society wheeze. In fact, in 2014 the government reduced the higher payers' rate to 45 per cent. Since leaving office, he has taken over the running of an Ireland-based £750m hedge fund. Salary details are scanty, but it's not likely to be anywhere near the median UK income.

It doesn't have to be like this. High pay is not natural, it's a political choice. For 40 years governments have at best turned a blind eye, and at worst have encouraged it. It does not have to be like this. In Labour's report on executive pay, the noted specialist on corporate governance Prem Sikka argued for six measures to curb excessive salaries. These include compulsory pay gap reporting with regards to women and ethnic minorities, banning golden handshakes, scrapping executive share options (which can lead to risky behaviour – see Fred Goodwin), sorting out bonus culture, and giving stakeholders, defined as employees and consumers, a vote on executive pay.

As these recommendations are backed by John McDonnell they are virtually certain to be in the next Labour manifesto, which then puts the Conservatives in a tight spot. With the polls delicately balanced but Labour seemingly doing all the intellectual heavy lifting, we could be living in the end times for the gilded, boardroom trough.