THE Government has begun a consultation exercise to look at ways of stamping out the so-called fat cat pay culture of big business.

A document, entitled Reward For Failure, was yesterday published by Trade and Industry Secretary Patricia Hewitt, looking at ways to stop directors and executives walking away from failing companies with huge pay-offs.

The long-awaited consultation paper will examine severance payments, the drawing up of contracts, and the possibilities offered by self-regulation and legal reform.

Ms Hewitt said: "Britain has some of the best and most successful businesses in the world. But the good reputation of the majority is being tarnished by the bad practice of the minority."

The consultation will continue until September 30.

Ms Hewitt said the exercise was in response to continuing shareholder unrest.

She had not ruled out the possibility of changing the law in exceptional cases, an idea rejected by Confederation of British Industry director-general Digby Jones.

He said business was ready "to put its own house in order", but said legislation would be unworkable.

TUC general secretary Brendan Barber said: "Business leaders are now gambling at the last chance casino. Unless they stop rewards for failure and curb corporate greed, they will inevitably face tough legal challenges."

GMB general secretary Kevin Curran said: ''Fat cat directors have shown no ability for self-restraint so far and a consultation document with no teeth will certainly not enlighten them."

The growing row over fat cat pay has led to rebellions against remuneration packages. At drugs company GlaxoSmithKline shareholders refused to agree to an executive pay package.

But other companies have also faced criticism, including the HSBC bank, Tesco, Shell and Royal & Sun Alliance.

Debt-ridden steel company Corus met angry opposition to its decision to rewrite its bonus scheme to enable senior executives to pick up payments even if the company was not operating in profit.