Who will save the critically endangered big City fatcat? Labour, strangely enough

The fat cats are roaring back. And I’m afraid it’s (partly) thanks to Labour. You’re probably going to ask if they ever really went away. Fair point. Perhaps we should say that fat cats are about to find it a lot easier to get a lot fatter and government policy is facilitating them.

Over to Julia Hoggett, the boss of the London Stock Exchange, who said at an FT conference that boards have become “much more forceful” when it comes to the award of inflated packages to CEOs and other top people. In the last year, the median UK CEO pay grew by 11 per cent to nearly £5m. That compares with a 7.5 per cent rise to $16m (£12m) in the US. So, the UK is bent upon playing catch-up. PS: Official figures show the average UK worker’s pay grew by just 4.6 per cent.

Hoggett reported a “pretty significant shift” with remuneration committee chairs increasingly prepared to throw money at “top talent” and receiving the backing of shareholders to do so: “We are not talking about Elon Musk-style pay packages here. We are talking about being able to attract and make sure we can win in the war for talent.”

Things that make you go “hmm”, because I would suggest Elon’s staggering $1tn Tesla package certainly is playing a role in all this. More workaday CEOs look at it and say, “I want some of that. Maybe not a trillion. But I definitely deserve a raise!”

Really eye-popping packages are still apt to create a fuss, especially if the companies involved aren’t doing so well. But the government has quietly acted to damp down controversy about this latter-day gold rush.

Let me explain: Theresa May’s government instituted a register – a sort of corporate naughty step – of all those companies that had suffered a vote against the board of 20 per cent plus. That mightn’t sound like all that much, but remember, the AGMs of well-run, well-governed companies are usually (and indeed should be) very boring.

The results of votes on the re-election of directors, pay and other such business ought to look like the results of North Korean elections. More than 20 per cent opposition shows you have a serious problem with your investors. Big institutional shareholders do not like publicly voting against boards. They much prefer to bend the ear of the chairman or chairwoman over lunch. So, if the public opposition is as high as 20 per cent, you can bet that the real level of unhappiness is much higher.

May’s register, administered by the Investment Association (IA), was like an amber warning light to boards, publicly telling them that they need to listen. And quite right too. This is our money we’re talking about. Institutions invest the funds of lots of small savers, via our pensions, ISA savings etc, with companies. We have a stake in what they do and what they pay their CEOs. We have an interest in whether they are misusing our funds.

But Labour has quietly junked the register, making it harder for us to see what’s going on. Andrew Ninian, director for stewardship, risk & tax at the IA, said it had “achieved its objective” in promoting “engagement between boards and shareholders, particularly where there has been significant dissent”. But its absence will inevitably encourage backsliding.

Another seemingly unrelated decision comes from the Financial Conduct Authority, which has eased its rules on short-selling shares by hedge funds and the like by ceasing to publish the identities of those who do it. Part of the government’s push to deregulate the City and further the aim of growth, you see.

But wait, how does reducing transparency foster growth? How does denying the likes of you and me the tools to see how our money is being used and spent further the government’s economic ambitions? The answer is that it doesn’t.

I suggest that what’s really going on here is an attempt to smooth the ruffled feathers of the City and the business community, especially the latter’s well remunerated leaders. They were (rightly) very upset at the tax bombshell Rachel Reeves chucked at them by hitting their companies with higher national insurance contributions for every person they hire (it hit workers, too, whom they started firing).

They are also deeply unhappy about reforms to boost workers' rights and a chunky increase in the minimum wage, while watching aghast as ministers have mismanaged the economy and run around like a bunch of headless chickens without any discernible strategy.

So, here, the government is saying, we’ll make it easier for you to hit the CEO pay jackpot by taking away the naughty step, and your mates in the hedge fund industry will be able to do their thing as well. See? We love you really.

It is richly ironic that the register was introduced by a Tory PM, whose corporate governance reforms I criticised as tepid but which now look better by the day as a Labour government rips them to pieces. How on earth did that happen? Maybe we really are living in a mad computer simulation.

Have you seen the problem yet? Whilst it is busily stroking CEOs and helping them pocket raises, Labour has also hammered working people with higher taxes. Freezing income tax thresholds has only a small impact on someone earning £5m, because the vast majority of their income is taxed at the top rate. But getting dragged into a higher tax band matters an awful lot to people on £50,000.

Rachel Reeves also hit our pensions, reduced what we can put into cash ISAs, and unveiled plans for a poll tax on those who bought into the government’s green agenda by shelling out for an electric vehicle. No wonder people are cross.

I wonder what happens if they start to work out just how much Labour is quietly doing for the City’s top people while they’re getting stiffed?