Leading article: 'Fat cats' still have some slimming to do

It seems a while since business "fat cats" headed the list of most resented individuals in Britain. They were superseded by big bankers and then by MPs as targets of popular anger. But the first full survey of directors' pay over the financial year suggests that the term may be overdue for a reprise. While most employees in the private sector felt the chill wind of austerity on their backs – and still do – the directors of FTSE 100 companies, taken as a group, were not doing at all badly. It is hard to resist the conclusion that pay restraint in many cases tends to stop at the boardroom door.

A freeze on top salaries that was widespread in 2008-09 thawed in 2009-10, applying in only one-third of companies, compared with two-thirds the year before. Total remuneration increased by 4 per cent, which might sound modest to those used to rather higher annual rises, but this was comfortably above inflation and considerably more than most workers on far lower salaries received. What is more, low or zero increases in directors' basic salaries were, in many cases, more than made up for by bigger, sometimes much bigger, bonuses. So much for the idea that the "bonus culture" might be on the way out.

While accepting that there are cases where high, and even very high, pay is eminently justified, we have to admit that these findings are disappointing. Quite clearly, the pain of the recession has not been shared as it might have been; the brunt has been borne by middle- and low-paid employees, who have often been expected, along with stiff pay restraints, to accept worse job security, inferior pension arrangements or a cut in hours. That pain is now set to spread to the public sector and – as the Prime Minister warned in Manchester yesterday – to benefit recipients. The most highly rewarded, however, and those who can set their own pay, have remained largely exempt, and there is little sign among this elite of any serious will to change.

As far as remuneration for work is concerned, Britain is one of the most unequal of the advanced economies – far more unequal than most of our Continental neighbours. To a degree, this was tolerated so long as the country appeared to prosper. The trickle-down theory remained, just about, alive. But the recession reversed such hopes. The wealth gap remains stubbornly wide and widening, and those at the bottom are worst hit.

This government, and latterly the previous one, both introduced measures designed to address a general feeling that the very top earners were not doing enough to pay their way. There is the new, 50 per cent, top rate of income tax; restrictions on tax privileges for payments into pension funds; a rise in capital gains tax for higher-rate taxpayers, and the decision not to raise the inheritance tax threshold. But there remain many ways in which the very highest earners can shelter their income. As the report on FTSE 100 directors' remuneration shows, companies are already considering ways to minimise the effect of new restrictions on payments into pension funds.

Other curbs on high pay are limited to particular sectors. New regulations on deferring bonuses apply only to banking; and a proposal to limit senior managers' pay to 20 times that of the lowest paid would apply only to the public sector. Some strictures on bonuses have been adopted by FTSE 100 companies, and transparency relating to directors' pay has certainly improved. But shareholders have shown less inclination to challenge boardroom pay than might have been expected, and where they have tried, they have rarely succeeded.

It was to be hoped that the most highly paid business people in the land might have shown more awareness of the national mood and adjusted their demands accordingly. If that does not change, public pressure for more statutory measures will only grow.