The soaraway super-rich shame British politics – and our politicians

Jeff Fairburn, who is chief executive of the housebuilding company Persimmon, is now a legend in the fur-lined world of fat cattery; with a £47.1m pay package in 2017, he has outstripped previous title holder Sir Martin Sorrell, who in 2016 had a pay package of £41m, reduced by 71% last year, shortly before his departure from WPP, to a mere £14m. Persimmon is foremost among the outriders in the High Pay Centre’s latest survey of the remuneration of top executives in FTSE 100 companies, but the median increase – excluding outliers – is still 11%.

If Persimmon and the industrial turnaround specialist Melrose, the other extreme case, whose chief executive Simon Peckham got an eye-widening £42.8m – were included in the High Pay Centre’s calculations, then the mean rise in top pay would have been 23%, taking the average to £5.7m. Top-earning bosses are paid 145 times the pay of their average employee. Most ordinary workers are lucky if their pay has kept up with inflation.

The Persimmon largesse feels all the harder to swallow when the homes the firm builds typically cost nearly 10 times the average salary, and their profits have been boosted by help to buy, a Treasury handout that has had the entirely predictable consequence of increasing the cost, rather than the affordability, of starter homes. And like almost all private homebuilders, Persimmon is no stranger to reneging on commitments to build affordable homes on the grounds that they would make the project unviable.

What do you even do with £47m? This tiny handful of the super-rich glide on by, dropping a suggestion here that they will donate some of their haul to charity, indicating there that they will reject a future bonus, but somehow still trousering enough to buy a small village in Somerset, or even a couple of flats in the redeveloped former US embassy in Grosvenor Square. The gap between pay on the shop floor and the shareholdings and bonus packages of what is nowadays known as the C-suite – the top floor reserved for people with chief in their job title – quadrupled between 2000 and 2010, faltered and then started growing again.

Over the same period, incomes of almost all the rest of us, the bottom 90%, have flatlined. And while the whole of the top 10% has seen some growth, the share of income taken by the top 1% has more than doubled since 1975, to 13.9%. But the incomes at the very peak of the scale, the top 0.1%, have simply come untethered from reality. Everyone, except presumably the top 0.1% themselves, expresses outrage. At annual general meetings, shareholder activists withhold approval (although there are rarely enough of them to make a difference); politicians protest; the prime minister commits to action. In 2020, at last, top companies will be obliged to publish their workplace pay gap. That is an advance. But it is nowhere near enough.

Soaraway salaries for top bosses are a marker of a winner-takes-all society. They are the encapsulation of a world where success can only be measured in hard cash and the state is expected to step out of the way. They reward financialisation, where size of dividend is a proxy for value, instead of more sustainable indicators such as measures of productivity, worker satisfaction or safety. They act as a disincentive for a more productive use of resources. But they also indicate a much deeper and even more serious malaise: the sense that politicians no longer have the appetite or the power to make change happen.

There are many explanations for mad levels of executive pay: an overvalued stock market based on the falling value of the pound and asset inflation from quantitative easing; absentee shareholders nodding through blatant tax gaming by remuneration committees; and benchmarking, which sees the rising tide of FTSE 100 bonus schemes lifting the pay of the whole fleet of senior executives. Now the Sheffield Political Economy Research Institute suggests another factor: the Americanisation of the British economy.

By analysing published information on the most senior executives of listed public companies, it shows a close correlation between the number of US investors and pay rises at the top. The same is true where companies employ Americans, or people with US experience on their CVs: US executive pay is still well ahead, but UK executives are closing the gap. There is no evidence that such companies perform better. But US investors prioritise shareholder value, and US investment funds believe in pay for performance.

This may be about symbolism, but symbols matter. The pay of company bosses is unjustified and unjustifiable. It is blatant unfairness in a rampantly unfair society. And the longer politicians allow themselves to be persuaded that somehow it is beyond their power to intervene, or to intervene would pose a threat to national prosperity, the more powerless they appear. And the more powerless they appear, the less reason ordinary voters will have for trusting the political process.

• Anne Perkins is the Guardian’s deputy political editor