All in this together? Directors' pay up 49 per cent

FTSE 100 directors receive a 49 per cent pay increase, while average pay rises by 2 per cent.

While most workers endure below-inflation pay rises or no pay rise at all, it's business as usual in the boardroom. Income Data Services, which crunched the numbers, found that the average FTSE 100 executive director received a 49 per cent rise in the last financial year to bring their total remuneration to £2.7m. Over the same period, chief executive pay rose by 43.5 per cent to £3.8m. Conversely, average pay, excluding bonus payments, has risen by just 1.8 per cent in the last year, well below inflation, which stands at 5.2 per cent.

At a time when company share prices and profits have fallen, what explains such extravagant rewards? Pay is set by remuneration committees, who are supposedly bound to guard the shareholder interest. But in practice the committees are dominated by a closed circle of former managers, who can ignore shareholder votes. As Deborah Hargreaves, chair of the High Pay Commission, noted on the Today programme this morning: "remuneration committees on companies are often made up of other executives from other companies with an interest in keeping pay high."

So, to quote Lenin, what is to be done? Both the coalition and Labour have addressed the subject in recent months, a break with the New Labour era when soaring executive pay was viewed as an immutable law of gravity. Vince Cable, for instance, has promised to force remuneration committees to explain in annual company reports why pay is so out of line with performance, and to give shareholders a legal binding right to block excessive pay. Meanwhile, Ed Miliband has focused on the need to diversify membership of remuneration committees by ensuring that they include at least one employee.

But such long-term promises won't satisfy the populist demand to curb excessive pay. For now, the truth is that we're all in it together but some of us are more in it than others.

George Eaton is political editor of the New Statesman.

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Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for International Trade.

Only Nixon, it is said, could have gone to China. Only a politician with the impeccable Commie-bashing credentials of the 37th President had the political capital necessary to strike a deal with the People’s Republic of China.

Theresa May’s great hope is that only Liam Fox, the newly-installed Secretary of State for International Trade, has the Euro-bashing credentials to break the news to the Brexiteers that a deal between a post-Leave United Kingdom and China might be somewhat harder to negotiate than Vote Leave suggested.

The biggest item on the agenda: striking a deal that allows Britain to stay in the single market. Elsewhere, Fox should use his political capital with the Conservative right to wait longer to sign deals than a Remainer would have to, to avoid the United Kingdom being caught in a series of bad deals. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.