From time to time I read and hear people discussing what kind of society a self-governing Scotland could become, given enough political will power and people empowerment. The dialogue usually ranges around issues of caring for certain sections of society, the best type of education for children highly structured or free wheeling, a liberal attitude to small-time crime, and the distribution of wealth. Sooner or later people denounce fat cats. You only have to recall the sheer arrogance of Sir Philip Green taking on a government Commons committee investigating the crash of the store chain BHS to know what society is up against.
Green grows the rushes o’
Green is a prime example of how to get filthy rich overnight by selling a company on its knees. Hours after haranguing members of the committee – in one instance demanding a committee member “stop staring” at him – Green was drinking the best liquor on his new multi-million yacht, and still no one had arrested him for plundering his company. Green had at first refused to appear before the committee.
The British Establishment, ever so keen to provide a token example, are considering removing his knighthood. Yes, that will teach him a lesson. I suppose they might also consider stopping his delivery of yogurt at breakfast to enforce their displeasure at his naughtiness. Back in the day, he would have been dubbed a ‘wide boy’.
More cockney wide boys
More recently Green’s alter ego, the rough and tumble, ducking and diving, Mike Ashley, boss of Sports Direct found himself on the end of a truly withering official report. His employer practices were likened to a Victorian workhouse. This is the man who had claimed he had nothing to hide, and was improving conditions for his worker.
Union officials told MPs that in one case an employee had given birth in a toilet at the company’s warehouse base in Shirebrook, Derbyshire, because she feared losing her job if she called in sick.
Allegations also surfaced of some workers being promised permanent contracts in exchange for sexual favours. Arrive five minutes late to work and pay is docked. Workers are charged a £10 one-off fee, a monthly management fee of £10, 75p for cash withdrawals, 10p for texts to the card holder of any transactions and £1.50 for a paper statement. 19th century coal face miners come to mind, lining up for their weekly pay packet, costs docked for hire of helmet, lamp, shovel, boots, and leather knee breaches.
And another one – Sports Direct
Committee chairman Iain Wright said evidence heard by MPs last month suggested Sports Direct’s working practices “are closer to that of a Victorian workhouse than that of a modern, reputable High Street retailer”. In a lather of cliché the report concluded, the committee said it would visit the firm’s base and “continue to hold Mr Ashley’s feet to the fire. Mike Ashley founded the company, it’s made in his image and he’s very hands-on.”
Like Green, Ashley first refused to attend the the UK government hearing. And like all near-elite – Green and Ashley are not quite rich enough to be classed as uber-powerful – both men gave themselves gargantuan salaries and bonuses.
Who’re you calling a wide boy?
Few people have heard of Tony Pidgeley, the founder and chairman of the property giant Berkely Group. His latest pay rise puts him ahead of JK Rowling’s fee for the rights to a Harry Potter book. In 2015, Tony Pidgeley’s pay flew off the Richter scale from just under £4m to £23.3m in a single year, thanks to a performance-related share option scheme.
He was not alone. Records show ten leaders of FTSE 100 companies were awarded a combined £100 million in addition to their 2015 pay; for example Fleming Ørnskov, the boss of medical group Shire, saw his pay rise from just over £2 million to £15 million, and Ross McEwan saw his pay double despite presiding over a loss at the state-owned bank. Nice work if you can get it.
Corruption has no shades of grey
At a time when “the elite” have come in for a bashing from all sides in politics, it is worth pointing out that FTSE grandees such as these are not even properly part of the elite. As with Green and Ashley you’re still – in elite terms – seen as a second-rater. But that isn’t the point. The point is, we, us, the public, we are all the losers, robbed of investment back into the community, and a living wage with a safe pension. In Green’s case, 11,000 BHS workers will lose their jobs, are losing them now, and their pensions are in jeopardy. None did a thing to endanger the company.
Still, Green got it right. To avoid taxation at high levels, but not necessarily awkward questions, run a company through the private equity model, where the business is managed by a close relative in a tax haven. The private equity model ensures minimum scrutiny of your accounts but maximum attendance at your lavish parties by airhead catwalk models, insecure celebrities, and sycophantic journalists.
To hell with democracy
Whatever the corporate structure, the mind-boggling sums being sucked out of UK businesses by the rich are dysfunctional – both to the economy and to democracy.
This essay isn’t the place to go into great detail about how those men are unconstrained ethically and financially, able to increase their takings from the till without anybody stopping them. Readers should look into the history of their companies for that. What is important is how these men are not jailed.
The answer there is straight forward, they get rich because the UK government helps them to achieve riches, legally. Remember, a lot of off-shore tax havens are British owned, the “most corrupt country in the world”. (See link for sister essay below.) But they’d much prefer them not to do it openly.
Property means wealth not just a home
According to the records made public, Berkeley Group quintupled its share price by riding a property boom that was stimulated first by quantitative easing – the system whereby the govern prints money – and then by the government’s help to buy scheme. The explicit aim of quantitative easing is to push investors’ money into the stock market, boost demand for shares, all helped along by government policy.
Still more help was given by the UK public sector, in the form of land sales to developers on terms that generally reward the developer. By sheer chance I came upon this snippet in the Financial Times: It is the same story, more or less, at Persimmon, where “a share option scheme issued at the trough of the downturn looks likely to hand managers up to £600 million.” Eat your heart out JK!
The beauty of all this is that nobody did anything wrong. What is wrong is the entire system. It is geared towards transferring wealth from the people who create it – that is, people who actually work on the shop floor, the factory conveyor belt, erect the steel girders, build the houses, and save their money in pension funds – into the hands of people who already have wealth in skip loads. (Skip: US dumpster.)
What is the answer?
The answer as I see it, brings me back to my first remarks about what we should do to create a better society. We should protect our society against rampant greed and avarice.
Here are some ideas in bullet line form:
- A pay cap, senior pay limited to, say, 10 or 20 times average pay? (20 is generous!)
- Prevent wealth flowing from productive people to the elite by restructuring the economy. Anybody pocketing £24 in one year should be jailed.
- Make property speculation a crime; pursue policies that can suppress boom and bust, whether it is in the property market, the stock market, or any other market.
- Tax assets, not just income. Executive pay is structured around share options, not just salaries and bonuses, because it is more “tax efficient”, so hit assets.
- Make a positive case for rent controls.
- Have a stock market in line with the real economy, not the fantasy economy created by a shortage of housing and a glut of money.
A small nation such as Scotland has a good chance to implement such controls compared to a nation already corrupt to the core, such as England. These goals should be a new nation’s priorities. As political friends have said, who gives a damn if a few fat cats drag their sorrows to another country and another jurisdiction? The quicker they get the hell out of Scotland, the better for us all.
Read sister essay: Crime the UK and Brexit: http://wp.me/p4fd9j-7dL