Snouts still in the trough — and now bosses want 20 per cent of every profit
MARTIN VANDER WEYER Ilike to think I helped start the national debate about fairness and executive pay with an article here in May 1993 headlined 'Snouts in the Trough', illustrated by Garland with pin-striped porkers helping themselves to huge portions of gravy. Since then, bosses' pay packets have ballooned — the heat in 1993 was caused by £140,000 salaries for water company chairmen, whereas this year more than 4,000 City bankers are set to receive million-plus bonuses, and one, Driss Ben-Brahim of Goldman Sachs, is said to be collecting (presumably in an armoured truck) £50 million But the arguments against fat-cattery remain stuck in early 1980s leftist rhetoric: the TUC's Brendan Barber admits it's wrong to resent 'proper rewards for hard work or risk-taking', but points out that the Goldman bonus pool alone would be enough to give every British worker £350; Peter Wilby in the Guardian keeps it simple by calling for 'a return to the politics of envy'.
Well, envy is a deadly sin, and equalising downwards has long been recognised as economic folly. But some of the principles involved remain just as I stated them in 1993. Entrepreneurs who found and run successful businesses are fully entitled to their fortunes. Chief executives who revive ailing companies, generating large gains for shareholders as they do so, also often deserve to become what Wilby calls 'filthy rich'. Functionaries who merely exercise a steady hand on the corporate tiller deserve less lavish rewards, but can expect the 'market' rate for publiccompany directors, which has nothing to do with market rates for doctors, teachers or shopfloor workers.
As for Mr Ben-Brahim and his ilk, they are not bosses but middle managers, and their bonuses represent about a fifth of the profits of their specialist trading activities, leaving four fifths for the owners of the capital deployed — a similar proportion to the fees creamed off by managers of hedge funds and private-equity firms. This principle is relatively new and rather insidious — because soon all executives, whatever their business, will claim that at least one fifth of all profits should be theirs: stand by for a trenchant exposition of this argument in Conrad Black's defence when his case comes to court in the US in March.
Turkey leftovers A couple of afterthoughts from my recent trip to Istanbul. When the great domed basilica of Aya Sofia was completed in 537, the design was so radical that its architects, Anthemius of Tralles and Isidore of Miletus, did not know whether it would actually stand up. But 10,000 labourers built it in five years, ten months and 24 days, and for a thousand years it was the largest enclosed space in the world. London's Olympic Delivery Authority has precisely five years, six months and 21 days to complete the Olympic Park at Stratford — and I probably don't need to spell out my train of thought. Bringing in 10,000 Turkish workers to finish the job would be controversial, but we've never had a problem with radical foreign architects. Anthemius, Isidore, fly over on your magic carpet and save us from national embarrassment.
My flight from Heathrow to Istanbul cost £82, arrived on time and included dinner and a showing of The Queen. My GNER train journey from York to Kings Cross en route to Heathrow cost £85, arrived two hours late and included a cup of bad coffee. Those who declared the pre-Christmas fog to be God's way of defending the planet against irresponsible air travellers say this comparison is out of kilter because the flight was shamefully cheap. But the truth is that long-distance rail fares have become shamefully expensive at a time when environmental arguments tell us train travel ought to be made as cheap as possible. GNER's abandonment of its franchise — which I predicted in August — surely creates an opportunity: Richard Branson and the Stagecoach bus tycoon Brian Souter are said to be keen to take over the route, but what we really need is a bid from Michael O'Leary of Ryanair.
Death duties This column generally strives for jocularity, but sometimes life just isn't funny. My sister Linda — a gifted artist and teacher, and a free spirit to the end — died in November, aged only 55. Grief and anger being adjacent emotions, I embarked on the task of putting her affairs in order in the expectation that automated switchboards and unfeeling bureaucracy would drive me repeatedly to rage. But someone somewhere has been running courses on how to deal with the bereaved on the telephone: so far the process has really been quite therapeutic. Utility companies, local government departments and benefits offices have without exception been helpful and sympathetic. One bank fell at the first fence — its call-centre operative offering duff information and no condolences — but made sufficient amends to avoid being named and shamed. I especially warmed to Miss Agoo, the registrar of deaths at Lambeth Town Hall in Brixton, where I had braced myself for a gruesome experience. She was dignified and kind, with beautiful handwriting, and she lent me her fountain pen to sign the certificate in the great book; when I complimented her on it, she said simply, 'We're registrars. We like pens.'
I cannot, however, speak for the dignity or kindness of the gentlemen of HM Revenue and Customs, who sit silent in their counting house waiting to receive a cheque equivalent to several years' growth in value of my sister's very modest south London house. The word is that taxmen these days are under orders aggressively to pursue every last pound of inheritance tax — and anyone who thinks IHT at 40 per cent is not going to be a major electoral issue next time round should contemplate the potential six-figure fine it now represents for every suburban family. Just take a look at form IHT 200, which demands to know the value of every chattel, down to 'garden equipment, tools etc'. That old mower might fetch 25 quid in a car-boot sale? That'll be another tenner for Gordon then.
But such indignities won't trouble the City elite with their seven-figure bonuses, who will be more concerned as to which charities should benefit from their largesse. Let me suggest two that are, this winter, close to my heart: Macmillan Cancer Support and Trinity Hospice at Clapham.
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