The gravy train rolls on reaching ever more sickening heights of greed, selfish gratification and disregard for the ever deeper miasma of poverty that disfigures our country. The latest figures show that the richest 10% of the UK population, who already owned 52% of UK wealth just before the 2008 crash, have become significantly richer since the crash because of the rise in value of financial assets, during a time when averages income have fallen 8% in real terms. Britain now has 2 million dollar millionaires, if the value of equity in houses is included, up by almost a third since last year. There are also now 44 billionaires in Britain, up from 8 in 2000. The individual excesses continue apace, only getting ever more outrageous. BG Group has just appointed a new chief executive, Helge Lund, previous boss of Norway’s Statoil company, with a £15m ‘golden hello’ and potential earnings of an additional £14m a year. At the other end of the scale are 70 former NHS care workers for the disabled in Doncaster who have taken so far 85 days’ strike action resisting the further crushing of wages and terms and conditions for the lowest paid. Their jobs were outsourced, holidays cut, and take-home pay cut by a third. Care UK which won the contract and ousted them is owned by private equity firm Bridgepoint Capital and its chairman John Nash was recently made a peer after donating a quarter of a million pounds to the Tory party.
So what should be done? The Labour party has focused on seeking to raise the lowest wages by committing to an £8 an hour minimum wage, though postponing this target till 2020 undermines much of its impact when it is so badly needed now. But there is no clear strategy for tackling outlandish greed at the top. Giving a binding vote to shareholders, the Vince Cable solution, won’t have much effect when shareholders are only concerned about their return on capital, not about the remuneration of the chief executive if he delivers those profits. Guidelines from a High Pay Commission won’t cut much ice either if unaccompanied by sanctions.
There are only two mechanisms which are likely to be effective. One is to introduce a maximum top:bottom ratio for salaries from the boardroom to cleaners on the shop floor, to be phased in over time. In 1970 the ration was 40:1; it is now 185:1. A 10-year phase-in period should be set to reduce it back to 40:1 or preferably 25:1. The second mechanism would be to give a say to employee representatives rather than shareholders. If an Enterprise Council was set up in all large companies (say, those with more than 1,000 employees) composed of representatives of all the main grades of employment and meeting at least once a year, it could be tasked with reviewing progress on all aspects of the company’s activities, including assessing pay claims at all levels of the company right up to the top. But these initiatives are only likely to be enforced if Labour appoints a Minister with the specific brief to tackle inequality in all its forms. It would be a highly popular move.