Holding the nation to ransom
Payment of £14bn in City bonuses this year, according to Office of National Statistics data just published, exposes just how decadent this country has now become in the huge and growing rift in inequality between rich and poor. The great divide opened up in the 1980s under Thatcher; now New Labour has made it a lot worse – and that’s official.
City bonuses rose 30% in this last year from an already enormous £10.9bn in 2006. Average total pay for FTSE 100 Chief Executives increased last year by 37% to £2,875,000 a year, that is £55,288 a week. That’s 98 times their employees’ pay, 276 times the national minimum wage, and 658 times the basic State pension.
Inequality is now becoming the No.1 top political issue in Britain today. When nurses on low pay are being told they can only have a 1.9% increase this year and when prison officers and other public sector employees are smouldering over pay restraint as well as other issues, Bob Diamond of Barclays took home £23 million last year and Bart Becht of Reckitt Benckiser walked off with £22 million. It is shameful that in New Labour Britain such pay obscenities have been allowed to happen, indeed been encouraged by their let-the-markets-rip philosophy. As Peter Mandelson put it so charmingly: “We are quite relaxed about people becoming filthy rich”. What about the 12 million people in Britain today who are so poor that they have to subsist on Income Support? Since wealth and poverty are two sides of the same coin, where does that leave the poorest under the current neo-liberal economic agenda? Out of sight.
Several policy changes are needed:
The divide between top pay and average and low pay has now become so cast that it cannot be justified under any conceivable rational system of incentives. We need a Pay Commission to be established to set down guidelines (with tax sanctions to back them up) for a reasonable pay range between top and bottom which offers incentives that are consistent and fair throughout the range.
Bonuses, performance payments, so-called fringe benefits, and stock options are now so extensive and so concentrated on the richest in society that for this 1-2% or so at the top there should be a super-tax on these super-rich for their very large extra payments over and above basic salary, perhaps 50% on the first £250,000, 60% over £1 million, rising to 70% over £5 million.
We need an early Parliamentary debate and wide-ranging public discussion on this issue when it is stoking house price inflation, generating deep resentment among badly done by employees in key public sector services, and undermining all sense of any balanced social cohesion throughout the country.
Graphic: ONS