Leading article: Fairness is more than fine words

Share
Related Topics

Since this newspaper expressed dismay at the scale of Stephen Hester's pay last week, the boss of RBS joined Sir Philip Hampton, his chairman, in turning down his bonus. It was a welcome gesture, but it was only a gesture. Just as stripping Fred Goodwin of his knighthood last week was a gesture. It does not deal with the larger problem, which is that the taxpayers who own the banks disapprove of the level of their executives' pay; or with the still larger problem: that pay in the financial services sector is seriously out of line with most people's idea of fairness.

It was alleged, when Ed Miliband, the Labour leader, made these arguments in a speech last week, that he risked being anti-business. The Independent on Sunday is no more against successful businesses in competitive markets than are the British people. Indeed, we are in favour of incentives to work or to work more productively, and we are in favour of the market economy. But if incentive schemes are not working, they should be dropped, and if markets fail, one of the functions of government is to put that right.

Thus, as an employer, the Government is entitled to demand evidence that bonuses do actually raise performance. That applies to the £100m bonus pool available to reward public servants on which we report today. Furthermore, as the controlling shareholder in two banks, the Government must ask about the effectiveness of their bonuses and long-term incentive plans. Not least because so many in the City seem to think that "bonus" comes from the Latin for "expected" and that "long-term incentive plan" stands for "complicated scam for obfuscating pay rise without raising base salary".

Beyond that, the Government should worry about the gap between the very rich and the rest. That did not seem so important during the long Blair boom, when most of the poor and most of the growing middle class felt they were getting better off. But now, with the middle squeezed, and the poor starting to feel the sharp edge of cuts, Labour's failure to challenge the City of London when it provided tax revenues looks more foolish. Inequities that might have been tolerated as the price of general prosperity are now seen as an insult. Such intolerance of inequality can only become worse. The Institute for Fiscal Studies pointed out last week that 88 per cent of George Osborne's benefits cuts are yet to come. That means that the bonuses that may be paid to officials in local government and at the Department for Work and Pensions, responsible for most of the cuts, need to be handled especially carefully.

Yet this is no anti-capitalist or anti-business sentiment. The banks are able to afford distorted levels of pay only because they have been bailed out, directly or indirectly in the case of Barclays, by the British taxpayer. If the market had been allowed to work, they would have gone bust. Whatever they are being rewarded for, it is not successful risk-taking.

That means, in turn, that David Cameron should act on his own rhetoric of empowering shareholders – in the case of the two state-controlled banks, us. But it also means that the Government should change the rules of the market more generally to reflect the more testing demands for fairness in straitened times.

Mr Miliband made two modest proposals in the House of Commons last week. One was that banks should be required to disclose the names and earnings of employees paid more than £1m in a year. The other was that a shop-floor employee should be on every pay committee.

To the first, Mr Cameron replied that it "should be done at the same time in all countries across the European Union"; to the second, that "it breaks an important principle of not having people on a remuneration committee who will have their own pay determined". Such reasoning would make Billy Liar blush. Indeed, most arguments against greater openness and accountability are specious.

Mr Cameron was forced last week to withdraw the unparliamentary charge of hypocrisy against Mr Miliband. He should realise that it is he, with his unconvincing protestation that we are "all in it together", who is most vulnerable to that accusation.

React Now

Latest stories from i100
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Senior Environmental Adviser - Maternity Cover

£37040 - £43600 per annum: Recruitment Genius: The UK's export credit agency a...

Recruitment Genius: CBM & Lubrication Technician

£25000 - £27500 per annum: Recruitment Genius: This company provides a compreh...

Recruitment Genius: Care Worker - Residential Emergency Service

£16800 - £19500 per annum: Recruitment Genius: Would you like to join an organ...

Recruitment Genius: Senior Landscaper

£25000 - £28000 per annum: Recruitment Genius: In the last five years this com...

Day In a Page

Read Next
Labour's Jeremy Corbyn arrives to take part in a Labour party leadership final debate, at the Sage in Gateshead, England, Thursday, Sept. 3  

Jeremy Corbyn is here to stay and the Labour Party is never going to look the same again

Andrew Grice
Serena Williams  

As Stella Creasy and Serena Williams know, a woman's achievements are still judged on appearance

Holly Baxter
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones