Time to stop defending the indefensible fat cats

So, strike over, dust settled; say a 0 – 0 draw?

To be honest, it was all a bit tame for me. No heroic gathering around the braziers for months while the wife and kids go hungry and all costing the country less than a day off for a royal wedding or golden jubilee.

To be honest, for a few brief moments, my own instincts for solidarity wobbled too.

Actually, why should public sector workers continue to qualify for pensions no longer available to those in the private sector?

Then again, I thought, why not? Why shouldn't they have a little extra time in the sun?


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We all know it can't last forever but in this neck of the woods, for example, pretty poorly paid council workers looked on for years while time-serving insurance clerks drew double their wages before retiring at 60 with two thirds of their working salary as a pension for which they had paid not a penny piece by way of contributions.

Be that as it may, divisive sectoral comparisons only serve to deflect the focus of debate away from the real culprits of financial injustice who some politicians seem tribally inclined to excuse and protect, even nurture.

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Meanwhile, they purposefully set out to rein in public sector pensions and peg wage rises to one per cent, subduing protests about it by deploying the constabulary and all the horses from its stables.

The battle lines now need redrawing, but these small matters of pay and pensions aren't going away.

Whether in fear of new strikes, fresh riots or, less likely, because of a belated attack of bad conscience, I read that Deputy Clegg is threatening that his man Vince Cable will issue proposals next month to curb excessive executive pay. More sabre rattling? Probably.

But maybe, just maybe, the old Tory line that checking obscene wages wouldn't make one iota of difference to the economy has been exposed for the lie it has always been.

The fact that the average 'top hat' private pension pot is valued at �2.8million – enough to buy a pension worth more than �170,000 a year – somehow got subsumed by outrage that a typical council worker retires on �5,600 a year.

The albeit low profile High Pay Commission report published last month after a year gathering evidence is clearly proving harder to ignore.

Executive pensions, it said, were 'corrosive' to the UK economy and reflect a 'deep malaise' which is bad for the economy and has negative impacts on society. Among other things, it criticised the practice of hiding such executive awards within footnotes of annual reports.

The pundits seem to think that greater transparency – a need for boardrooms to explain clearly why top execs earn what they do – will fix it. If that's what the forthcoming government proposals amount to, Clegg and Co had better think again.

They need to remember that the likes of ex-RBS boss Fred The Shred Goodwin and erstwhile Lloyds chief exec Eric Daniels, currently being pursued by the old firm wanting to claw back some of the �1.45m bonus he is banking on, seem to suffer little either from bad conscience or adverse publicity. I suggest, gentlemen of the coalition, that you chew on these findings by the Commission in order to temper your resolve.

First, the much quoted brain drain factor – the idea that pay must be stratospheric to 'match market rates' and prevent the brightest stars of the business world scuttling off abroad. A myth, it appears.

The Commission's evidence shows that just one, yes one, successful CEO from a top British company was good enough to get poached in the last five years – and by another British company at that.

Success deserves reward, say the defenders of the indefensible. On the contrary, excessive high pay bears little relation to company success and, at its worst, merely rewards failure, the Commission finds.

All very dispiriting for the great unwashed maybe, but the fairer distribution of ill-gotten gains will be lost like a few grains of sand in the desert of your socialist utopia, goes the right wing banter. Another myth, I fear.

Thirty years ago, says the report appositely called Cheques with Balances, the top 0.1 per cent of Britain's earners took home 1.24 per cent of national income. Right now, it's almost five times that. By 2035 the top 0.1pc will take home 14pc of the national income and we will have reestablished the exact ratio that existed in Victorian England.

Talking of ratios, executive pay last year was 145 times average pay and by 2020 will be 214 times greater. In the last 12 months, with the economy on the skids, the chief executive's pay at the biggest 100 companies averaged �4.2m, his executives got pay rises of 49pc and the staff 2.7pc.

Respect to the High Pay Commission and its suggestions for putting things right but forcing companies to put staff stooges on remuneration committees, publishing pay ratios and naming and shaming executives with their snouts in the trough won't work.

For starters, how about docking the bonus of HSBC boss Michael Geoghegan who oversaw the missselling of long term care bonds to elderly people who wouldn't live long enough to benefit from them. Unfortunately, he left last year taking half his �3.8m bonus with him. I'm sure he can be relied upon to forfeit the deferred half

•This article was first published on December 8, 2011.

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