LEADING ARTICLE : Major's goodbye to the Eighties

He has seen the light - oh yes! A blinding flash of psephological lightning yesterday struck the Prime Minister, leaving him apparently converted to the idea that government may, after all, have a role in controlling greed. Where once any attempt to regulate executive salaries was "dangerous", and anybody who advocated it guilty of the "politics of envy", suddenly the Cedrics and the Edmunds are persona non grata, to be given a good seeing to.

What has prompted this sudden retreat from the unyielding tenets of High Thatcherism? The amounts do not seem to have become any more outrageous. Nor does the issue seem to have altered much in its nature or dimensions. The answer must surely lie in a belated recognition of just how much damage the spectacle of executive troughing is doing to the electoral chances of the Government. What were once big Tory pluses - privatisation and its benefits - are turning to ashes in the eyes of the electorate.

A calculation has clearly been made that an embarrassing volte-face by the Prime Minister is more likely to be forgiven by the voters than an obstinate insistence that there is nothing to be done. Without seeing the polling and focus group evidence that John Major and Jeremy Hanley have doubtless been poring over, it is hard to know if their gamble will pay off.

Still, we must not turn away converts to a good cause. For if last week's John Major was wrong, this week's is right. As he told the House, the spectacle of executives being awarded vastly inflated salaries, which neither personal nor corporate performance has earned, is deeply distasteful. He knows all too well that in many cases the enhanced profitability of a utility, whose assets were previously undervalued, testifies to the luck - rather than the skill - of the chief executive.

Although it is dangerous for government to become too enmeshed in telling private companies what to do, there are steps that can be taken which would not interfere with the right of a private business to run itself. In the case of utilities (and especially monopolies), Labour's suggestion that the regulator could take excessive settlements into account when fixing prices is a sound one. Price reviews should discourage excessive return to either capital or labour at the expense of the consumer.

Legislation to ensure the maximum transparency for executive pay would enshrine one of the best aspects of the Cadbury committee report on corporate governance. It is likely that further suggestions will also emerge from the work of the CBI committee, chaired by Sir Richard Greenbury, chairman of Marks & Spencer, and due to report in June.

But perhaps the most important contribution that John Major could make is to continue to say what he said yesterday. In the end no one but the shareholders of a company can actually decide what a chief executive earns. Government, Parliament, press and people could all, theoretically, receive an emphatic two-fingered salute from the boardrooms - and nothing in the legal system could prevent it. Life does not work like that, however. The atmosphere of the Eighties, which seems to have moulded the remunerative psychology of the utilities, has given way to a different outlook. Gradually the condemnation of corporate greed by customers and politicians alike is going to force a change of tack. It will, of course, be a supremely self-interested move - a conversion not so much Pauline as Porcine.