Politics
How the rich keep the poor in their place
Published 30 August 2007
The easiest way to redistribute wealth is via the tax system
It must be hell being rich in Britain these days. So generous have directors' pay packages and City bonuses become, that the amount of cash sloshing around is creating a shortage of luxuries. The waiting list for a new Rolls-Royce is now five years. Luxury marinas are becoming congested with the plethora of giant yachts, and as for crew . . . well, you just can't get 'em.
Nonetheless, it is still rather worse being poor. While the rising costs of mooring a yacht won't blight the lives of many public sector workers, the increasing wealth of execs and financial sector employees does have a detrimental impact on life at the bottom, particularly for those who live in the capital. Bonuses are a key factor in the rising cost of property and contribute to the high cost of living in London. Worse, the sums being creamed off by the rich are now so large, and the recipients so many, that their impact on the economy is measurable.
According to preliminary figures from the Office for National Statistics, reported by the Guardian, City bonuses are likely to reach £14bn this year. In the economy as a whole, bonuses and directors' performance pay will amount to roughly £26bn. To put this figure in manageable perspective, that same sum could give the poorest-paid 20 per cent of British workers an increase of almost £5,000 each.
And they certainly could do with it. This is the group that the Joseph Rowntree Foundation calls the "breadline poor". It includes one in four children, many single-parent families and a disproportionate number of women and black workers. The roles they play are important to the economy and to our well-being, such as hospital workers, hotel and restaurant staff, and cleaners in the offices where roughly 3,000 City workers will pick up bonuses of about £1m each later this year. It would take a cleaner 90 years, working 40 hours a week with no holidays, to earn a million at the current minimum wage of £5.35 an hour.
Richard Lambert, director general of the CBI, defends performance-related pay mechanisms as "a very effective way to motivate employees" (why City traders need more motivation than hospital porters is never explained). But it is also an effective way to disguise core inequalities. Public sector unions are at present negotiating to get pay increases for some of the lowest-paid workers in Britain above a government standard of 2 per cent. They might push this a little nearer to the private sector norm of roughly 3 per cent, but as bonuses and performance pay take the increases for the top-paid far higher, the equality gap inevitably widens.
The single most effective remedy, and one that should appeal to Gordon Brown's work ethic, would be to raise the minimum wage steadily above the level of inflation (and, just as importantly, rigorously enforce its payment). In October, this will rise from £5.35 to £5.52 an hour - which leaves the poorest exactly where they were, failing to share in the country's increasing wealth.
A second simple remedy, for which some unions are now pressing, is to create a culture in which an organisation's pay and conditions are transparent and give employees the right to see how much their colleagues earn. A recent Rowntree report revealed that few of us realise how wide the pay gap between top and bottom has become. Openness would have a particular impact on women's pay, which lags a stubborn 17 per cent behind men's, 37 years after the Equal Pay Act.
A third push towards a fairer distribution of wealth could be made by the Commission for Equality and Human Rights, which launches in October, taking on the work of the former Equal Opportunities Commission. That body's final report recommended placing a greater duty on employers to eliminate discrimination and monitor and publicise progress. Fighting against discrimination and low pay has to be a collective responsibility, shared by unions and managements.
The easiest way to redistribute wealth would be via the tax regime, a strategy now abandoned by all main parties. Yet, over the past 20 years, a large and enduring majority of people (73 per cent in 2004) have said they think the gap between high and low incomes too large. They are probably voters.
The Famous Forty-Fives
Lashings of ginger beer! There, we've said it, as did no doubt many others on catching the news that Enid Blyton's Famous Five is to return to our television screens. But let's hear no more about fizzy pop, scones, macaroons and picnics on Kirrin Island - the forthcoming TV drama may have the blessing of the Blyton estate, but it will be no nostalgic indulgence. Instead, Julian, George, Dick and Anne will be "reimagined" as 40- to 50-year-olds, with the cares of middle age having taken their toll.
How will that be? We hear that at least one of them is expected to be divorced. Another, perhaps, might have had their home repossessed in the last housing crash and will talk obsessively about rising mortgage payments. No longer will Dick be able to scoff at such "rot", having been reduced to living in a bedsit on the North Circular after investing all his money in one of Uncle Quentin's scientific inventions, the market for which dried up after Taiwanese copies flooded into the UK.
Tomboy George never got over the death of Timmy the dog, and is fast on the way to becoming the local bag lady, absent-mindedly trawling the beach where she and her closest companion used to race. Cousin Anne, who always was a bit prissy, thinks George smells. She is terribly proud of her brother Julian who, after a brief period as a nose-ringed punk, is now an immensely smug Tory MP. Five Have a Truly Grim Reunion? Well, let's hope not.
Post this article to
We want to encourage people to comment on our content and to exchange views with other readers and hope this will be done on a courteous basis. However, if you encounter posts which are offensive please let us know by emailing comments@newstatesman.co.uk and we will take swift action where necessary.
