Wednesday, May 30, 2007

Deputy Leadership Debate

I felt seriously cross after watching the deputy leadership debate last night on Newsnight. Nothing irritates me more than supposedly senior politicians claiming that we need to "cap" salaries in the City.

Why do we need to do this? How will it help someone poor if someone in the City had their salary capped at say £100,000 instead of earning say £200,000? All that would happen is that the Inland Revenue loses £41,000 in tax revenue. A few people may be kept warm with pleasure that a supposed "fat cat" in the city is earning less, but most of the public arn't clamouring for anyone to earn less at all.

Only 5% of the workforce works in the City, but they pay 30% of income tax - which our government then redistributes in the form of tax credits, free healthcare and whatnot. If we halve the salaries in the city, all that will happen is that we'll lose about 15% of current income tax revenue. We then have two choices - we cut spending accordingly, or we put tax up on the ordinary man to make up the shortfall. Do either of these options help the ordinary man? No! If you are too much of a dunce to understand this, Harriet Harman and Jon Cruddas, then you are not fit to be deputy leader.

New Labour has always been about smashing artificial glass ceilings, not imposing new ones (which a cap on salaries would be). Perhaps Harman and Cruddas imagine the City is still like it was in the 1970's when it was run on a closed-shop, old-school-tie basis and unbelievable dunces were paid good money simply because they went to the right schools. But that's all gone now. Under New Labour the City has become the most meritocratic part of Britain, probably the most meriticratic part of Europe. They really don't care whether you went to a comprehensive in Wales, or are from Kazakstan or Namibia. If you are good at maths and are bright and go-getting, they will hire you. If you make a lot of money for your employer you will get a bonus, if you fail to do so, you get fired (they have less job security than the rest of us). And old school ties count for naught. It would be nice if some people woke up and recognised how much has changed.

Perhaps Harman and Cruddas were confused and thinking about the way some chief executives rob their shareholders by paying themselves fat bonuses for failure. But Labour has already legislated to give shareholders an annual vote on boardroom pay - and some shareholders have seized their opportunity and voted down big pay deals, notably when GlaxoSmithKine shareholders refused to authorise Jean-Pierre Garnier's pay package.

If people really wanted to tackle glass ceilings, they should be criticising the media industry. According to a report last June, most leading journalists went to private school. 54% of the top 100 newspaper editors, columnists, broadcasters and executives were educated privately, while fee-paying schools represent just 7% of the school population. It's well known that jobs for new entrants are based on contacts - whom you know, not what you know - and that it is very difficult for people from comprehensives in the provinces to break in no matter how brilliant they are. Now that is truly unfair. Where is the equality of opportunity? Given the often malign way the media try to set the national agenda (against the interests of the general voter), this glass ceiling is the one Labour should be seeking to smash, not attacking the City which is a pure meritocracy, has contributed positively to our economy, and is our golden goose that is paying for redistribution.

I wasn't much impressed with the other candidates either. Hazel Blears irritated me by constantly talking about "Cameron's Conservatives". Doesn't she know that while the public dislike Conservatives, they like Cameron, and that the phrase "Cameron's Conservatives" implies he is changing the Tories? Doesn't she realize that by repeating the phrase she is doing his advertising for him?

Hilary Benn sounded soft and waffly. Peter Hain - well he does look like permatanned medallion man, but I have respect for the way he shrewdly bounced the parties in Northern Ireland into reconciliation. That took unusual nous and insight into human nature, and it may be an indication that he would be a great backroom fixer. I also liked Alan Johnson, I agree with his general policy drift. He tends to give boring speeches but is funny and human in conversational debates and TV interviews, and is exactly the foil needed for Brown's gravitas.

I'm going to go for Johnson as my first choice and Hain as number two. As for the others - arrhhh!


Hughes Views said...

I think if you look at Hilary Benn's time in International Development you'll find that beneath his soft exterior there is determination & effectiveness. It can't be just coincidence that Britain is one of only two rich nations that has exceeded its obligations during his time in post. He's my number 1 at present with Alan Johnson at 2.

You're spot on re 'capping' salaries. It's unworkable nonsense. The dreaded politics of theory rather than practice...

Political Umpire said...

Even Red Ken knows to leave well enough alone with the City. The reason is simple: in these days of internet, video links etc if the City felt threatened in London it would decamp somewhere, anywhere else overnight - Frankfurt, New York, Bermuda, whatever. Politicians don't like this as they prefer to think of themselves as able to control and manipulate anyone and anything, but they can't always get their way.

Personally as much as I am frustrated megasalaries don't come my way, I accept Goldman Sachs et al are entitled to spend their money as they see fit. What irritates me is those in failing companies, particularly former public utilities, still getting their bonuses as the companies lose money hand over fist.

Anonymous said...

Completely and utterly agree with just about every word of that - spot on. Wow, that's a first!

snowflake5 said...

political umpire - Labour has legislated to allow shareholders of utilities and other publically quoted companies to vote down boardroom pay.

But of course government can only give shareholders power - they can't force them to use it. It's a pity so few shareholders can be bothered to kick up a fuss at payments for failure - after all the payments are coming from the shareholders' pockets - you'd think it was in their interests to make a fuss?

Stephen Farrington said...

I agree snowflake, Labour should not be attacking the rich nor giving in to the logic of the 1970s. Harman might have attacked him, but Johnson was right on the issue of aspiration. Labour need to ensure equality of opportunity, not outcome. Harman and Cruddas seem to ignore than, and prefer to pander to the left.