If we must give honours to business people, let's have a quota and sell them to the highest bidder

Captains of industry are in a proper sulk because they receive fewer knighthoods than academics, scientists and headteachers. Evidently underemployed in the economic slowdown, they have totted up who got what over the past couple of years and feel snubbed by the government's "socialism in action".

This was the counter-intuitive indictment - in an interview with the Sunday Times - of Sir William "Bill" Castell, chief executive of Amersham and chairman of the Prince's Trust (the Prince of Wales's charity for disadvantaged young people that is also an exclusive club for businessmen of a royalist bent who have a social conscience).

Castell runs a world-class business selling medical diagnostics equipment to hospitals and know-how used by researchers into the human genome. He has diverting things to say about a range of public policy issues, from the National Health Service to agriculture and genetic engineering. But on this issue, he is crackers. He has written to Patricia Hewitt, the Secretary for Trade and Industry, bemoaning the "almost total absence" of business people and entrepreneurs from the New Year Honours. In his view, wealth creators make an enormous sacrifice on our behalf and deserve greater public recognition.

Now I am not terribly sure about the sacrifice. Having spent a couple of pleasant hours last summer chatting to Sir William about his magnificent new library, an arboretum, an extraordinary book collection and his predilection for adventure holidays in exotic locations, I am not persuaded he is on his uppers. And Amersham's annual report shows that he earned £634,000 last year and that his interests in Amersham shares are worth around £3m.

However, as you will doubtless predict from the tenor of my previous columns, I say hooray for him. One lesson to be taken from the success of the US economy is that there is a link between the ability of entrepreneurs to become egregiously rich and growth in productivity. It may not be edifying, but business people are more focused, determined and imaginative if their reward is riches beyond anyone's spending capacity. If Castell can prove that he is laying waste to the competition and generating hundreds of millions in incremental value for shareholders, I say give him a fully fledged wood and a couple of coppices.

It is this logic that justifies Gordon Brown's cuts in capital gains tax for people investing in the businesses for which they work, even though the Chancellor has been strangely bashful about the full implications of this aspect of his redistribution policy. You will not have heard him boasting about the millions of pounds in tax windfalls he is handing to partners in Goldman Sachs, Cazenove and assorted City firms. But if you are slightly shocked by Labour's largesse to individuals who are already extremely wealthy, hold your nose: a more benign tax regime should give incentives to talented individuals to take on the risks involved in creating new businesses.

On the other hand, there is little evidence that gongs are good for UK plc. I am sure I could put together a devastating statistical analysis demonstrating that the UK's worst-performing blue chips tend to be run by knights and lords, though a few anecdotes will do for now. Thus there were two sirs at BT, Iain Vallance and Peter Bonfield, and its performance was wholly lamentable. At Marconi, there was a knight, Sir Roger Hurn, and a peer, Lord Simpson, but there has been nothing but pain for the shareholders. And there have been titles galore at a whole range of troubled companies, from M&S through to Corus (the former British Steel) and almost every media company.

Indeed, I think I first became convinced that BT was heading for the rocks when its then chief executive, Bonfield, sent me an e-mail and I noticed that his e-mail address was "sir.peter.bonfield@bt.com".

Meanwhile, there is a semi-respectable argument that awarding honours and titles can improve the standing and status of a profession or occupation and act as a magnet for recruitment. This is the case that senior ministers and officials involved in the selection process make for the honours system.

I was cheered when Tony Blair said a few years ago that he wanted more honours to go to teachers. A bit more bourgeois ambition in the classroom would probably be no bad thing.

But the notion that business will become more glamorous if a few more of the UK's paunchy corporate potentates make it to the Palace is laughable. It is not even faintly plausible that 18-year-olds choose a career for its knighthood potential, however appallingly conservative and materialistic today's youth may be.

Even so, a member of the government tried to persuade me that it was a very good thing that Richard Branson eventually got his knighthood. Sir Richard, I was told, would seduce young people into a career in business in a way that Mr Branson would not. This is nuts. If Branson is a role model, it is because he has made a fabulous fortune and is constantly surrounded by trolly dollies in bikinis.

Anyway, I hope Hewitt has filed Castell's letter in the cylindrical cabinet, along with the used paper cups and detritus of office life - although, knowing this government, he has probably caused a generalised panic that the plutocrats are in revolt. My recommendation is that there should be a quota of honours for business, but - rather than hand them out in the usual haphazard and irrational way - they should be auctioned to the highest bidder. That's what I call a perfect marriage of market forces and social justice.

Robert Peston is editorial director of Quest(TM); www.csquest.com; e-mail rpeston@csquest.com