Public anger about the vast salaries extracted from business by the highest-paid people surfaces less often than one might expect, given highly conspicuous levels of inequality and rising poverty. Sir Philip Green and Fred Goodwin are rare in having become notorious big earners: Sir Philip because of the collapse of BHS, as well as his own inflated rewards and oligarchic lifestyle; Mr Goodwin because he exemplified a greedy banker type at a time when anger at banks was at its peak.
More recently, a colossal £75m bonus paid to the chief executive of the housebuilder Persimmon, Jeff Fairburn, resulted in his departure from the business. But Mr Fairburn – who was reported earlier this year to have failed to keep a promise to set up a charity – did not become a household name.
A year and a half into a pandemic that has decimated careers and livelihoods, and with the damaging effects of Brexit unfolding, particularly in the food sector where labour shortages and new trade rules are causing disruption, high pay is again making waves. A report from the High Pay Centre revealed this week that the bosses of FTSE 100 companies are paid more in a year than many people earn in a lifetime – the average figure of £2.69m is 86 times the £31,000 that an ordinary worker earns in a year.
That such disparities do not shock people more than they do is because the public has become used to them and the greed that they signify. Having grown massively in the 1980s, the gap between rich and poor has been stuck for three decades. Pressure on this year’s super-earners is probably also less strong than it might be because average FTSE chief executive pay has fallen (by 17% compared with the £3.25m recorded in 2019). Relief may also be afforded by the glint of reflected glory: top of the table is Pascal Soriot, chief executive of vaccine-maker AstraZeneca, whose pay packet contains an eye-watering £15.45m.
In some ways, the decreasing focus on incomes makes sense. Awareness is growing that wealth, as well as pay, must form part of any meaningful financial reckoning. Those who care about fairness and the distorting effects of markets are increasingly concerned about the concentration of assets, particularly housing and pensions. Policies designed to address the abyss dividing the haves and have-nots – including a disproportionate number of younger adults – need to focus on savings as well as incomes.
Nowhere is this clearer than in the UK’s grossly unjust housing system, which enables an estimated 2.6 million landlords to extract rent from the growing number of those who face never being able to buy their own homes – with prices increasingly out of reach for anyone without either a huge salary or substantial inheritance. Winchester in Hampshire, it was reported this month, is now the least affordable city in the UK, with property prices averaging 14 times earnings.
Increased focus on the polarising effects of wealth, foreshadowed by the work of scholars including Thomas Piketty, is overdue and important, particularly in the UK, which is more unequal than its neighbours. But that doesn’t mean that the fat cats of industry, finance and property are, or should be, off the hook when it comes to pay.
The fact that the company Mr Soriot leads makes vaccines and medicines does not mean that his vast personal wealth is healthy. And while the UK government keeps talking about “levelling up”, its lack of action on housing, and refusal to fund a comprehensive education catch-up plan, point in the opposite direction. Vast income disparities are as wrong as they ever were, and ought to be an opening for Labour.