At first glance, it’s hard to take Vince Cable’s recent comments at the Lib Dem party conference, pledging to crack down on top executive pay, very seriously.

Bonuses are one of those issues on which the public is accustomed to seeing government talking the talk rather than walking the walk.  At the height of public anger against inflated bonuses from bailed-out banks, ex-chancellor Alistair Darling levied a one-off windfall tax – but bankers and top executives seem to have been so far exempt from the coalition government's “no pain, no gain” approach to cutting the deficit.

Could Cable’s comments be the start of something new? He has announced ideas about giving shareholders the option to vote on pay in advance, new rules requiring companies to disclose more information about executive compensation, and also giving employees seats on remuneration committees. These all seem like necessary steps, but nothing which would fundamentally tackle the problem of excessive pay at the top – though seeing workers on remuneration committees, if implemented well, would be a good start in moving company structures towards something in line with democratic 21st century values.

Given that the coalition has no problem taking drastic measures which threaten to throw out the baby without the bathwater– taking an approach to so-called NHS reform which many in the health service think will take it towards the US’s disastrously regressive health insurance model – why not take the same approach to the bonus culture? Punitive levels of tax on high bonuses would send a signal that these executives are also a part of our society – and that Chancellor Osborne’s bitter medicine of deficit reduction applies to them too.

None of this is going to happen while Cable’s Tory coalition partners are scheming to abolish the 50p tax on high earners – which applies to only 1 per cent of Britons – but which a group of economists recently claimed was “doing lasting damage to the UK economy”. They gave no evidence for this assertion, which seems to bear as much resemblance to reality as the government’s hope that private sector growth will counter public sector cuts. Cable this weekend described the idea of dropping the 50p tax as  “childish fantasy”. He went on to say: “I think their reasoning is this - all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate...Pull the other one."

He’s right – but on Monday he also claimed he’d be happy to see the 50p tax rate phased out, if replaced by a high tax on those with properties worth more than £2 million. He should stick to his guns; a mansion tax would be a step towards tackling the injustice which leaves many locked out of the property market in Britain; but it is no replacement for a tax on excessively high incomes.

According to the thinktank One Society, pay ratios in Britain’s biggest companies range from around 656:1 at M&S to 48:1 at Capital Shopping Centres. Vince Cable has said himself that “The performance of [British] companies has not demonstrably improved, yet people are being paid an awful lot more. There’s something happening that isn’t right.”

The problem will be solved by actions, not words – and it’s his actions which, once the Lib Dem party conference recedes into memory, Cable will be judged on. If it’s ideas he’s after, the independent High Pay Commission will certainly have some advice they'd be more than happy to share. Top executives will squeal over anything that really threatens their high incomes – the Business Secretary should hold his nerve, and take their inevitable protests as encouragement. It is a sign he is on the right track.

Originally published 27 September 2011.