Tesco schools, the market in prime ministers and giving up Radio 4

Peter Wilby on the big issues of the week.

How can the "big society" work, when voluntary bodies are being cut so harshly? You may get a clue from the title of a book out this month: The Road from Ruin: a New Capitalism for a Big Society by Matthew Bishop and Michael Green, both writers for the Economist. Writing in the Times, the two explain that we don't need an "obsession with volunteering" or a "fetishisation of mutual societies". Rather, "the big society should be an opportunity to harness capitalism to make Britain a better place".

Bishop and Green pooh-pooh the idea that "local community activists" such as the writer Toby Young could start successful free schools. They "manifestly lack the ability or expertise". Instead, "chains of new schools" should be set up by Tesco. Supermarkets, with their track record of life-enhancing, mind-expanding, culturally uplifting activity and their scrupulous regard for pluralism, are ideally suited to such a mission.

Oh, all right, Bishop and Green didn't write that last sentence. They refer instead to Tesco's "large-scale ambition and business thinking". You couldn't have it stated more plainly. Even if David Cameron denies it - and even if he believes his denials, as I suppose he may - the big society is just an opportunity for big business to take over more public services. This is well illustrated by the likely fate of the Community Payback scheme, currently run by probation officers and due to be "competed" (as the government now calls "privatised") in 2012. The shortlist of preferred bidders includes Serco (annual profits: £194m), Sodexo (£648m) and Mitie (£80m).

Level paying field?

More than 220 local authority executives, it is reported, earn more than David Cameron. Why is this comparison relevant? The idea that nobody in the public sector should be paid more than the PM is bizarre. The figure always quoted is £142,500, though Cameron is entitled to another £55,000 that he doesn't take because he's a multimillionaire. His real earnings - rent-free housing plus various allowances - have been estimated at more than £500,000. He can also look forward to vast sums from lectures and memoirs after he leaves office.

I do not believe that the chief executives of Suffolk or Wandsworth councils have similar prospects or, indeed, private fortunes to fall back on. Council executives operate in a competitive labour market. Good people won't be recruited or retained unless they are paid something near the going rate, which has been absurdly inflated by the private sector. There is no market in prime ministers or politicians generally; Egypt and Italy may have leadership problems, but neither is likely to make offers to Cameron, George Osborne or Eric Pickles.

Wage slips

Do not be surprised that the government, aided and abetted by the Bank of England, is allowing inflation to rip. Inflation gives everybody an automatic annual wage cut while deflation delivers an automatic annual rise. That's why the boss class was so fearful of the latter.

At one time, the workers, through annual collective bargaining, negotiated a wage rise to cover inflation and often quite a bit more. Thanks to anti-union laws and the decline in union membership, that no longer happens over large areas of the economy. For the bosses, inflation does not hold the terrors it did in the 1970s, when the unions were much stronger. They reckon employees won't resist a cut in the real value of their pay. But if they attempted a cash cut during a prolonged spell of deflation, it might just revive union militancy, as happened in the early 1920s when prices fell by nearly a third and employers tried to slash wages correspondingly. Nearly all economists will disagree with my heretical analysis. So I'm pretty confident it's right.

Radio blah blah

After I left salaried employment, I resolved to give up listening to Radio 4's Today programme. What increasingly irritated me was the sound of the ruling class talking to itself. On any given morning, all the people who run the country are either being interviewed on Today or list­ening to it. Though millions of other Britons eavesdrop - presumably to discover what the ruling class is up to - nearly everybody on the programme is addressing fellow politicians, decision-makers and media folk.

Much of Radio 4's output is similar. It is self-consciously the top people's station in the sense that the Times used to call itself "the top people's paper". The BBC Trust wants Radio 4 to seek a wider audience, with more listeners from ethnic minorities, lower social groups and the north. But the problem isn't really with Radio 4. It's with the narrow social and geographical base of the British ruling class.

(That's enough consolidation, ed)

Here is an example, from a report in the Guardian, of how big business thinks differently from the rest of us. Lamenting that the UK's 1,200 local papers are published by 87 different companies, Georgina Harvey, head of Trinity Mirror Regionals, says: "A problem for the industry is that competition authorities actively discourage consolidation" (she means mergers). Well, yes, that's what competition authorities are supposed to do, particularly in an industry where diversity is usually deemed in the public interest.

In fact, 38 out of those 87 companies own just one title. Twenty publishers control 97 per cent of audited circulation, and that explains why your local paper probably contains mostly bland, standardised features and very little local news. That's quite enough "consolidation" for most of us. Never forget: the natural tendency of capitalism is towards monopoly.

Peter Wilby was editor of the New Statesman from 1998-2005

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 21 February 2011 issue of the New Statesman, The offshore City