Pay Peanuts, Get….Old Etonians
Fat-Cat pay stories took an unusual twist over the last week in the wake of the Panama Papers leak and the UK media’s determination to find a story worth reporting.
Having seen that both the Prime Minister & Chancellor of the Exchequer have declared all income, and paid all due tax (in excess of 40% of their respective incomes), the media have then moved on to the Prime Minister’s income; £200,000 per year, including rental income and profits/dividends from investments.
This for the Prime Minister of the United Kingdom; the man who runs our country. That puts him in the lower quartile of his Eton alumni. And we wonder why most modern-era Prime Ministers have been independently wealthy.
…and yet, the media, the opposition and increasingly the more susceptible members of the electorate continue to slam him for it and seek to find any and every angle to find wrong-doing. Politics of Envy?
Such attitude and behaviour will only lead to even fewer talented people entering public life than they do at present.
The same thing happens in business. Three years ago I interviewed a FTSE-100 CXO with a view to considering them for a similar business stature CEO position. She was perfect for the job. Natural-risk-aversion, complementary sector, perfect skills-match and great chemistry fit with the rest of the board. However she immediately ruled herself out. Why? She just didn’t need the hassle. She had no need to turn her £7-figure annual remuneration into a larger £7-figure remuneration and certainly didn’t need the increased stress, hassle and intrusion into her life. Her quote? “I don’t need the Ego-trip and extra trappings of becoming a CEO enough to offset the intrusion into my life”
This lady was already earning well into £7-figures, not a paltry £200,000. And she was one of 11 people running a £9bn business, not the leader of a £1.8tr nation.
Vilification of execs for no other reason than being high-achievers and high-earners is already dissuading increasing numbers of execs from climbing the corporate ladder to the highest levels…..and is one of, if not the key drivers behind poor representation of Women on Boards – as I discussed here.
Back to Cameron. Simply because of who he is, or more so, because of the role he has, he becomes vilified by the left, the left-wing media, and by millions who believe the headlines that such people broadcast.
From what we can see, Cameron has never taken any backhanders, he’s a loving/devoted husband, and he’s always been scrupulously honest.
The closest he has (as it stands at least) come to unscrupulous dealings, was the now infamous £19,000 profit he made from selling the shares he owned in his father’s offshore company in 2010, but he paid income tax on that in full.
However, to listen to his political opponents talk, you would think he was Al Capone.
Former Mayor Ken Livingston stated ‘He shouldn’t just resign, he should be sent to prison.’
What successful/intelligent leader would consider a political career in light of such groundless vitriol? And regardless of fact, be treated as no better than a common criminal?
But this is not just the preserve of the Right-hand side of The House.
Take Hilary Benn, the next-generation great white hope of the Labour moderates. His 2013/14 reveals he avoided paying substantial death duties on the £5m estate of his late father, ‘people’s hero’, Tony Benn….all thanks to the Socialist Firebreather’s careful tax planning.
Chuka Umunna, the smooth-talking, self-titled ‘British Obama’ accepted just under £3,000 from a company specialising in tax avoidance, at the same time as calling on George Osborne ‘to close in on tax avoidance, close in on tax loopholes and deliver greater tax justice’.
David Miliband, still talked about as a future Labour leader despite being dumped in 2010 because the Unions preferred Wallace, his brother. He set up a company called ‘The Office of David Miliband’ through which he channeled his non-Parliamentary earnings. By doing so, when he received a fee of £25,000 for a public speaking engagement, he only had to pay 20% corporation tax, rather than the 40/45% income tax he’d have to pay as a higher-rate taxpayer.
Ironically…this was the same dodge used by the blood-baying, anti-capitalist witch-hunter of Tory tax dodgers, Ken Livingstone. When forced to publish his tax return during the 2012 London Mayoral campaign, it emerged that in he’d routed £238,646 through his personal company, thereby saving himself £54,000 in tax! Ken bayed for The Prime Minister to be imprisoned after making £19,000 profit (and paying all Income Tax due); what would Red Ken think his own punishment should be for tax avoidance of £54,000?
Up until fairly recently, being a Member of Parliament was deemed a high status, aspirational occupation (or vocation?). MPs were seen as altruistic public servants who made huge sacrifices, personal and financial, in order to serve their country. They were rightly and duly respected.
They have brought large parts on themselves with their underhand dealing and (usually soft) corruption. Expenses anyone? But if we are going to pay them less than a Secondary School Headteacher, but still expect high intelligence, we need to expect bright people to know how to maximise their own finances, with the law.
Nowadays, MPs typically have a dire reputation and very minimal respect, ranked somewhere below Estate Agents (and Recruiters). Even proffering squeaky clean tax returns (even if filed late Mr Corbyn, and with no evidence of the income received from a well publicised lodger…!) will just provide the media and militant haters with more ammunition….as the disclosure of income and in particular, in Dave & George’s case, investment income and family wealth has already shown.
Wind back to the great leaders of this country over the last 100 years. What would have happened to Winston Churchill, famously poor with his own personal finances, if he had been forced to become transparent? Would the Dennis Skinner of the day have berated him in a red-faced, schoolyard spat? Or if the Corbyn of the day, Hastings Lees-Smith, had forced transparency? The Second World War might not have had the same outcome.
In business as in Government, we need to return to celebrating successful people in this country, instead of repeatedly denigrating them. £200,000 is embarrassingly low for The Prime Minister of the United Kingdom. There are over 300 other public servants that are paid more than he is. 35 people working on HS2, the head of the Civil Service, 50 people in Quangos set up following NHS reorganisations plus another 60 still within the NHS (not including Trust CEOs). And those figures don’t include the Executives residing in Local Government…..
As a country, and within business, we need to return to attracting the best. Not the best within a set of falsely limited parameters, the best, outright.
Within business, every Spring, we get the throng of media attention on CEOs as their pay awards are decided and announced. Perennial target Sir Martin Sorrell is ritually denigrated for his pay packet. Despite taking just £1.2m salary from the business he founded and still leads as CEO, WPP, choosing to have the rest of his remuneration based purely on performance, he still received media vitriol for his £8-figure bonus…..despite his business’s profits now rising to over £1.5bn this year.
The average FTSE-100 CEO earns £5m in total remuneration (in return for total FTSE-100 pre-tax profits of £100bn). That means a FTSE-100 CEO earns more in a fortnight, than our Prime Minister earns in a year (and a top footballer in less than a week). Why would you possibly go into politics if you were a well-educated, high-achieving leader; When instead you could opt for a vocation and earn the rewards of that vocation, in the entrepreneurial space…..…unless you were already independently wealthy?
If we want to change that, we need to attract the best, celebrate success, and accept a basic human right and instinct is to amass wealth to pass down to our children to in-turn invest into their lives and prosper.