So you think some salaries are too high? Just how high is too high, then?

I am not suggesting that £3m a year is not a lot of money..

I’d like to start this piece with two disclaimers. First, this is not intended as a justification of large remuneration packages for executives. Second, nor is it an article saying it’s right that someone earns 100 times what someone else does. But this is an article attempting to look at the other side of the debate. And it is written from a personal perspective, as an observer of the debate. This is not a headhunter trying to curry favour with their client base, or justify fee increases

We have to make a choice in this country. We either pay market-rate salaries and give ourselves the best chance of employing superb people, or we rely on extraordinary people deciding to do a job for far less than they could earn somewhere else. The only other option is to accept that paying below market rate gets us the equivalent employees. Large shareholders are comfortable with the first option.

I wrote the above in 2012. It was for an article defending Stephen Hester’s right to take a bonus where the criteria attached to it had been set three years before, where he had hit the criteria needed to trigger a bonus and where he was not receiving a full bonus because he had not hit every criteria. But people in positions of mass influence decided that this was unacceptable and we all know what happened then.

Yes, I am a headhunter writing in support of people being paid large salaries, and I know how it might look. But that does not change the fact that the first paragraph holds true. It might be worth me explaining why I believe this is so high profile now, and why taking an insular view will impact our competitiveness in the future.

I think anyone earning £1m a year or more is earning a very large amount of money. These sums are not trivial. I’m also conscious of the other argument against large salaries, namely how a banker compares with a nurse in terms of earnings and impact on society. I write this as the son of a teacher.

The challenge is that a vocational role will always be rewarded on the basis that most people doing it will do it for the bare minimum. In a capitalist world, if you can’t show the financial effect of your work, you can’t argue for a percentage of it. Again, this is an oversimplification but worth bearing in mind.

People leading businesses have always earned substantial sums of money. While there have been grumbles about this over the years, there has never been the sort of public outcry we are seeing now. So why is this? Well, I am reminded of an episode of Have I Got News For You several years ago. There was, for the time, the usual piece about MPs’ expenses.

One of the guests was Reginald D Hunter, the American comedian. After listening to the four British people on the panel for ages, he asked a few questions – the gist of which was “has this just started or has it been happening for ages?”.

Upon hearing that it had been happening for ages, he questioned whether the public outrage was a recent development. When the answer was “yes”, he basically said: “So, what you are telling me is that when everyone had enough money no-one cared about what the MPs were doing, but now the economy is in trouble, and people have less money, everyone cares?”

I feel the argument about remuneration does the same. If we are not careful we will start to hurt this county’s ability to ensure the finest people globally are running our enterprises. And that can’t be good for everyone.

But it’s when you turn to the numbers themselves that you hit an issue. Simplistically, how do you define what number is too big? You can look at multiples of the average national salary, or the average salary within an organisation. You can look at what feels morally like too big a number. Or you can make a comparison to what the prime minister earns. Or, as one Sunday paper did, to what the Archbishop of Canterbury earns. These are all arbitrary parallels. And none of them factor in that we work within a global context that continues to feel far smaller.

If we want the UK corporate world to play on a global stage and win, and offer an environment that global enterprise wants to trade with and work within, then we have to operate on that basis. That means we need a tax structure that the world is comfortable with, an employment environment businesses can work under and a remuneration system that encourages the world’s best talent to view the UK as a good place to do business in.

If you are a business person able to work globally and you are sought after, you can choose where you work and which organisation get the benefit of your experience and ability. Your first choice is likely to be a business based in the US. If you deliver, you can earn £200m over five years and be feted as a wonderful human. Your second choice is a UK-based business. If you deliver you can earn £15m over five years and be vilified in the press on an annual basis.

To be clear, I am not suggesting that £3m a year is not a lot of money. It’s a fortune. But when taken in context, against the global market place businesses work in, in the competitive world we all work in, factoring in the rewards paid to other executives in different countries, it does not look quite so outrageous.

If the large shareholders are comfortable paying global market-rate salaries, maybe its time the press and the public were, too.

Mark Freebairn is partner and head of the Financial Management practice at Odgers Berndtson

This article first appeared on economia

Photograph: Getty Images

This is a news story from economia.

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Leader: Corbyn’s second act

Left-wing populism is not enough – Labour must provide a real alternative.

Since Jeremy Corbyn first stood for the Labour leadership he has been fortunate in his opponents. His rivals for leader ran lacklustre campaigns in 2015 and failed to inspire members and activists who longed to escape the tortured triangulations of the Ed Miliband era. Later, at the 2017 general election, Mr Corbyn was confronted by a dismal Conservative campaign that invited the electorate’s contempt. Theresa May’s complacency – as well as Mr Corbyn’s dynamic campaign –has helped propel the Labour leader to a position from which he could become prime minister.

With greater power, however, comes greater responsibility. Mr Corbyn’s opponents have for too long preferred to insult him or interrogate his past rather than to scrutinise his policies. They have played the man not the ball. Now, as he is a contender for power rather than merely a serial protester, Mr Corbyn’s programme will be more rigorously assessed, as it should be. Over the months ahead, he faces the political equivalent of the “difficult second album”. 

Labour’s most electorally successful – and expensive – election policy was its pledge to abolish university tuition fees. Young voters were not only attracted by this promise but also by Mr Corbyn’s vow, in an interview with the free music paper NME, to “deal with” the issue of graduate debt. The Labour leader has since been accused of a betrayal after clarifying that the phrase “to deal with” did not amount to a “commitment” to wipe out student debt. In an interview with the BBC’s Andrew Marr, he explained that he had been “unaware of the size of it [graduate debt] at the time”. (The cost of clearing all outstanding student debt is estimated at £100bn.)

In fairness to Mr Corbyn, Labour’s manifesto said nothing on the subject of existing student debt (perhaps it should have) and his language in the NME interview was ambiguous. “I’m looking at ways that we could reduce that [graduate debt], ameliorate that, lengthen the period of paying it off,” he said. There is no comparison with the Liberal Democrats, who explicitly vowed not to raise tuition fees before trebling them to £9,000 after entering coalition with the Conservatives in 2010. Yet the confusion demonstrates why Mr Corbyn must be more precise in his policy formulations. In a hyperactive media age, a single stray sentence will be seized upon.

At the general election, Labour also thrived by attracting the support of many of those who voted to remain in the European Union (enjoying a 28-point lead over the Conservatives among this group). Here, again, ambiguity served a purpose. Mr Corbyn has since been charged with a second betrayal by opposing continued UK membership of the single market. On this, there should be no surprise. Mr Corbyn is an ardent Eurosceptic: he voted against the single market’s creation in 1986 and, from the back benches, he continually opposed further European integration.

However, his position on the single market puts him into conflict with prominent Labour politicians, such as Chuka Umunna and the Welsh First Minister, Carwyn Jones, as well as the party membership (66 per cent of whom support single market membership) and, increasingly, public opinion. As the economic costs of Brexit become clearer (the UK is now the slowest-growing G7 country), voters are less willing to support a disruptive exit. Nor should they. 

The worse that Britain fares in the Brexit negotiations (the early signs are not promising), the greater the desire for an alternative will be. As a reinvigorated opposition, it falls to the Labour Party to provide it. Left-wing populism is not enough. 

The glory game

In an ideal world, the role of sport should be to entertain, inspire and uplift. Seldom does a sporting contest achieve all three. But the women’s cricket World Cup final, on 23 July at Lord’s, did just that. In a thrilling match, England overcame India by nine runs to lift the trophy. Few of the 26,500 spectators present will forget the match. For this may well have been the moment that women’s cricket (which has for so long existed in the shadow of the men’s game) finally broke through.

England have twice before hosted women’s World Cups. In 1973 matches were played at small club grounds. Twenty years later, when England won the final at Lord’s, the ground was nearly empty, the players wore skirts and women were banned from the members’ pavilion. This time, the players were professionals, every ticket was sold, and the match was shown live around the world. At the end, girls and boys pressed against the advertising hoardings in an attempt to get their heroes’ autographs. Heather Knight, Anya Shrubsole, Sarah Taylor, Tammy Beaumont, and the rest of the team: women, role models, world champions. 

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue