Don't believe in trickledovvn economics? Consider the parable of the Chelsea nanny
MARTIN VANDER WEYER peter HaM says two thirds of City bonuses should be redirected to charity, or employers who dish them out should face tax penalties. David Cameron is trying to find a formula to suggest he disapproves of City greed while signalling that the City need fear no tax-grab from him Those who find the disparity between bankers' pay and everyone else's morally repugnant, or at least uncomfortable, often also cast doubt on the Iricldedown' theory — that the wider economy benefits efficiently from the lavish spending of the lucky few. Such sceptics should consider the parable of the Chelsea nanny.
A City friend who used to negotiate remuneration deals for bonus-hungry equity salesmen gave me a vivid account of an even more bruising recent negotiation: with the Slovakian girl who looks after his children. He lives in SW10, a district which is not only popular with investment bankers but also feels the warm breeze of rouble wealth from the nearby football club. He reckons local nanny salaries have doubled in three years — to a minimum of £31,500 a year and a top rate of £40,000, plus gym memberships, flights home and keys to the 4x4.
Back in 2003, when financial markets were at a low ebb, nanny demand was also depressed. My friend's analysis suggests that it is not the FTSE-100 index that provides a leading indicator of nanny pay, but the level of merger and acquisition activity — including the rash of private-equity bids such as the current one for J Sainsbury. Why the correlation? Because bankers who advise on takeover deals are typically posher than share traders, more likely to have been brought up by nannies themselves, and more inclined to hire domestic staff as soon as they can afford to. As the M&A boom took off, a surge in nanny supply from Eastern Europe was swiftly absorbed. Like Chelsea house prices, the nanny market looks set for a spectacular upswing for some time to come.
The result is that Chelsea nannies now negotiate pay deals exactly like City equity salesmen. In simple terms, it goes like this: you're rich; I'm worth it; sod relativities with nurses and teachers; pay up or I'll go and work next door. If that isn't trickledown, I don't know what is. But the quid pro quo is that employers who used to think of nannies as extra family members now think of them in colder, more businesslike terms. 'We're looking at right-sizing our commitment in the support services area, outsourcing to day nurseries, that sort of thing,' my friend confided. 'Basically, we're talking restructuring.'
Not talking turkey Bernard Matthews has never enjoyed a good press, despite — or perversely because of — his self-presentation as a benign Norfolk countryman in those ads for `bootifur turkey products. So it's hardly surprising that he kept a low profile after the revelation that his company's imports of Hungarian turkey meat are being investigated as a possible cause of the bird flu outbreak which has led to mass slaughter and a growing consumer backlash. I'm certainly not expecting the reclusive poultry king to offer another interview to The Spectator after the last one — which appeared in the Christmas issue of 1993 under the headline 'Turkey serial killer'. Hugh Massingberd, who cornered Matthews in his Great Witchingham Hall stronghold, recalls a difficult encounter. Matthews swiftly became impatient with questions about the welfare of his birds, but Hugh bravely persisted, asking if there was 'any chance of a peek' inside one of the vast turkey sheds. 'No, no, no.' Did they have ample room to move about? 'Turkeys don't need to be entertained to the theatre every night, or watch television. All they're interested in is food and water.' Well, maybe so — and it might be even crueller to make them watch much of today's television. But what a pity we ever acquired a national habit of eating creatures reared in such unnatural conditions, and in doing so put £300 million in Bernard Matthews's pockets.
Three sectors to watch Next week's issue is one of our periodic Investment Specials: we will look at the pros and cons of putting money into India, bloodstock, forestry and spread-betting. By way of an appetiser, let me introduce three other things — all in different ways related to fashionable concerns about climate change and environmental health — that I could be tempted to invest in, having recently encountered them for the first time.
The first is the tricycle rickshaw. Tottering out of the Garrick Club, I hailed one of these contraptions to take me to Bond Street: despite a chilly evening it was a surprisingly enjoyable ride. A fleet of rickshaws transports tipsy tourists in the West End at night — but why not all day and in much greater numbers, instead of some of the black cabs, which are among the capital's worst polluters? The constraint is cost: a state-of-theart Pedicab Rickshaw from Cycles Maximus of Bath will set you back £3,145. But there must be Chinese factories that could knock them out in kit form for a quarter of that. It's a market open for the taking.
My second hot tip is snuff. Tottering into the Savile Club (I hope I'm not starting to sound like a clubland bore), I found myself urged to snort this aromatic substance off the back of my hand. It didn't do much for me except tickle, but when the smoking ban takes effect in July it will be the only tobacco product that can legally be consumed (apart from chewing plug, which is too disgusting) in any public building or workplace. In Sweden, there are now a million users of 'slats', or moist snuff, the majority of them ex-smokers. Expect a huge boom in demand for the products of historic British snuff-grinders such as Samuel Gawith of Kendal — which offers a snuff for every taste, including scented ones called Lavender and Otterhound.
Third, black truffles, which I have just been hunting in the Dordogne with a neighbour and his labrador Orchys. If our climate is really becoming more prone to droughts and storms, we might one day have the right conditions for these fungi, which have been selling at up to €900 a kilo this winter; we already have plenty of chalky soil and oak trees. I admit it's a very long-term punt, and yields are uncertain — but what a lovely way to spend Sunday morning.
Previous page
