The Tories have caught the mood of dismay over executive pay, but their switch could be good for Labour in the long term
The coalition's new crackdown on fat cat pay is very cheering for the left but, for Labour, a little alarming. It's cheering because this agenda, including greater transparency on executive earnings and more shareholder power, originated in an independent left-centre campaign, which has now reached the door of Downing Street. Yet it ought to cause some agonised soul-searching for the Labour leadership because David Cameron and Vince Cable have planted their flags so cheerfully on ground prepared by others.
Let's not take the forceful-sounding words from the prime minister at their full face value until we've seen the detail of the proposals, and the legislation itself. Post-Blair, the difference between rousing language and actions that really make an impact is well understood in British political culture.
Cameron says he's open to having worker representatives on remuneration committees. Once the corporate bosses get lobbying, I have my doubts. He discusses the crucial question of proportion and percentage – how many times larger than the lowest, or average, salary in a company is the pot taken by the chief executive and his cronies? Perhaps we'll see some meaningful figures; but Cameron did not suggest there would be legal limitations. So let's be cautious.
Yet at one level, Cameron "gets it" because he has devoted his first big salvo of the year to the fairness agenda. This is an indication of how dramatically the country's political mood is shifting in response to hard times.
Like phone hacking or MPs' fiddled expenses, this is an issue that only needs to be described to seem reprehensible. We can all understand that a few brilliant inventors, entrepreneurs or leaders will reap big personal rewards, but the routine over-payment of FTSE 100 executives (getting an average of more than £2m a year) is something else.
While company profits and share prices boomed, it was an issue that most people simply never thought about. As profits and shares fall and people lose their jobs, it looks wrong. The system of corporate pay may be legal – but it is indeed "crony capitalism" when back-scratching non-execs fork out other people's money for one another, no matter whether the company is doing well or badly.
This had become a world where pay has little to do with proven skill, risk-taking or extraordinary ability, but is simply about the size of the company. The banking crisis exposed the greed of that industry but it didn't stop there. In the opaque world of pension fund investors and private remuneration committees, "shareholder power" had been reduced to a pious cliche. If your pension had money in MegaBucks Inc, it didn't mean you. If you worked for it, in a normal job, it didn't mean you, either.
So if Cameron and Cable are going to bring more transparency, and insist on shareholders voting on top salary proposals and pay-offs, and if we get meaningful published figures on pay disparities, company by company, then it's all welcome news. One day, it would be interesting to hear why as a culture we talk constantly about the importance of democracy and individual votes, yet never apply it to the commercial enterprises that rule our lives. Meanwhile, this feels like a start.
We shouldn't forget where this initiative started. The centre-left thinktank Compass was agitating about excessive executive pay in the New Labour years but failed to persuade the Brown government to fund a proper investigation. The excellent Rowntree Trust, which has done so much to promote fairness, stepped in, resulting in the independent High Pay Commission. And it is really that agenda that has seized the mood and moment at Westminster.
Ed Miliband might have lost his famous Zen calm for a moment or two as he heard Cameron accept most of that agenda, at least in principle. If he's going to make sure the coalition can't "own" it, he will have to move fast. Labour's job is now to hold ministerial feet to the fire, and push for more.
There is another lesson that may be even more important: to embrace the value of "outrider" thinktanks and independent thinking. Miliband has had a lot of stick for having too few policies. At this stage of the cycle, that's unfair. What's been lacking, however, is the bubbling creativity of centre-left thinking more generally. You might have expected more ideas about the future of manufacturing, education, the City and public services being proposed from non-official groups and thinkers, pushing Miliband and his colleagues. There are honourable exceptions, but this is hardly a time of intellectual ferment on the left.
That is odd because, as I argued last week, we are moving into a more defined left-right period as the years of austerity bite. People are remarkably ready to make sacrifices and rethink their expectations if they feel society is basically fair and the pain is being shared. The "New Labour" strategy of using the proceeds of boom to pay for better public services, while winking at the excesses the boom produced, now belongs to a lost age.
Morality and economy became words that never touched, worlds apart. Well, today they are back together – something even Cameron has been forced to acknowledge. Had he failed to address executive pay it would have been a mistake similar to, but even bigger than, his long relationship with the Murdoch empire.
But he's a shrewd politician and he's learning. On this he has left Ed Miliband and Labour far less ground than they must have expected, and shown that streak of political ruthlessness that Blair was so famous for as prime minister.
Longer term, none of this is disastrous, or even necessarily bad news, for the centre left. A country more interested in fairness, less tolerant of excess, is a country that will find the old ways of casino capitalism even less tolerable. The logic drives on, away from the economy that the Tories emerged from and still owe their allegiance to. It will make Cameron's life harder, not easier, as he is caught between corporate lobbying, including the paymasters, and the public mood.
Here is the larger picture for Labour to consider, a change in the national mood that is more conducive to centre-left values and that a centre-left party ought to be able to catch and speak for. But if anyone thought Cameron would make it easy, they know better this morning.
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