The world financial crisis has had us all grappling with unfathomable numbers.
This week the UK’s public debt has just passed the £1 trillion mark. Compare that with an annual turnover of global trade of just £56 trillion.
In contrast, the relatively micro level of bank bail outs three years ago saw the Government pump in £65 billion to save RBS and Lloyds, and hence avoid a domino effect throughout the banking sector.
By way of a “thank you” (to themselves!) over 350 people in RBS paid themselves over £1 million last year. No doubt their tax lawyers made sure that as little of that lolly was paid back to the Government (which saved the bank) in tax. In total £4.2 billion will be paid out by the City in bonuses this year.
It was little wonder that politicians became rightly exercised (some quicker than others) about the almost £1 million extra in “bonuses” which was due to be paid out to RBS Chief Executive, Stephen Hester until his public retreat. The Government has correctly proposed a number of measures in an attempt to curb excessive executive pay, performance related bonuses which seem to bear no relationship to performance and the “sod-the-rest-of-you” attitude which seems to go with it.
The culture of “to make the rich work harder you pay them more; to make the poor work harder you pay them less” is now well established in the UK. Senior executives talking about their fellow senior executives pay assure us that unless we pay the ransom then all of that talent will go abroad.
Is there really such little talent to go ’round? And what about commitment and loyalty? Are those concepts so old fashioned these days? Do we really want people who show so little real commitment that their pre-packed transatlantic job switch luggage is perpetually on show to their employers? Is loyalty only rewarded with a carriage clock at retirement?
I’ve been in politics long enough to have observed (excepting myself, of course) that the cream doesn’t always get to the top.
Therefore Government plans to make sure that shareholders have the power to veto “rewards for failure” pay deals and to give lower paid employees the chance to sit on Boards of companies to monitor and blow the whistle on excessive pay differentials are very welcome.
Coupled with bringing forward a new tax on wealth, the Government may have – albeit slowly – understood the national mood and begun to bring forward some sensible proposals. Three cheers for Dr Vince Cable.
31st January 2012
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