George Osborne – Simon’s Incoherent Blog

No representation, no rights–the plight of the invisible working class

The attack on the rights of Britain’s workers continues apace…

As the Conservative Party Conference rumbles on in Birmingham, I was surprised to hear a note of what felt almost like socialism from Chancellor and professional “posh boy” George Osborne in his speech on Monday. New businesses, he said, should hand out shares to all their workers, giving them a stake in the company’s success and motivating them to work harder. I could hardly believe my ears. A senior Tory – the one most responsible for the ever-widening gap between rich and poor in this country – espousing the idea that the fabled “wealth creators” should share some of their largesse with their underlings, by forming, in effect, co-operatives?

Ah, but there’s a snag, which came up next. In order for the workers to take advantage of this munificent offer, they would have to sign away some, perhaps all, of their employment rights. That sounds more like the Osborne I’ve come to know and loathe. The Osborne that wants to, in effect, bribe the British worker, already one of the least protected workers in Europe, to give away some of the few paltry rights he/she has left.

Meanwhile, a recent brainstorm by some new Tory high fliers has produced a particularly nasty little pamphlet called Britannia Unchained, in which they proclaim that British workers are the laziest in the world. And all the time, unemployment figures are kept low with fixed term contracts and part time positions which now seem the default instead of a full-time, permanent position. Never mind that these workers have to claim state benefits in order to live. They’re not “unemployed”, which makes the figures look better. They’re the new working class – the “working poor”.

Remember when we actually had a “working class”? It used to be almost a badge of pride for some; the idea that you were getting an honest wage for an honest day’s graft, and you were thrifty enough with your meagre income to eke out a modest but unpretentious standard of living. Ah, it were grand in them days…

Somewhere down the line, that disappeared. Perhaps it was during the blindly aspirational 1980s, when we were told that we all had social mobility; perhaps it was when John Prescott declared that “we are all middle class now”. Somehow, the label “working class” took on a mantle of shame, as though if you hadn’t reached “middle class” status, you just weren’t trying. So everyone started calling themselves middle class, regardless of how redundant that made the term. The rot probably set in when we started using terms like “lower middle class” and “upper middle class” in place of the middle/working class division. But however you want to label yourself, the vast swathes of the population toiling away for meagre payments means that the working class is still very much with us.

George Monbiot recently wrote an article recalling the July speech by Barack Obama, in which the US President proclaimed of businesses “you didn’t build that (by yourselves)”, the first part of which was ruthlessly appropriated out of context by the Republicans for their own agenda. Obama was referring to the fact that private enterprise always depends, to some extent, on spending by the state, financed out of taxes – roads, education, infrastructure and so on, while Monbiot focused on how many of these “self-made millionaires” had inherited the means to their success.

But they both ignored another vital aspect of “you didn’t build that by yourselves” – the workers who staff those businesses. The wealthy business owners like to twist the English language to portray themselves as benefactors by calling themselves “job creators”, a term predicated on the idea that their businesses give people jobs. And so they do. But it’s a two-way street. Yes, without those “entrepreneurs”, the businesses wouldn’t exist to “create the jobs”. But without the jobs then being done, by workers, the businesses themselves would crash and burn.

There’s been a lot of demonising of the very rich by the left, and the rich have taken exception to being described as “parasites” (even though it doesn’t seem to bother them when applied to the benefit-claiming poor). But the increasing agenda of hacking away at workers’ pay, rights and conditions makes the label all too appropriate. In a fair capitalist system, the relationship between a business owner and his/her workers should be a symbiotic one; the business owner provides jobs for the workers, the workers do the jobs that need to be done, for a fair wage, to keep the business running. Both have a stake in the business’ success, and both are motivated to ensure it. That way everybody wins.

But the agenda of the parties on the right, both here and in the US, is that progressively fewer rights and benefits should be conferred on those workers, while progressively more should flow the way of the already better off business owner. The Tories in the UK and the Republicans in the US clamour for lower taxes and less regulation for the rich, while hacking away at the pay, conditions and few remaining rights of their workers.

In the UK, the lobbyists for the rich urge us to get rid of the already paltry minimum wage, which despite its recent increase from £6.08 per hour to a princely £6.19 is still falling in real terms and was never enough to live on. The shortfall is then made up by the UK taxpayer in the form of tax credits, which effectively subsidise the profits of big businesses by allowing them to get away with paying wages that aren’t enough to live on.

The Tories’ pet businessman Adrian Beecroft and state-dismantling fanatic Mark Littlewood, of “thinktank” the Institute of Economic Affairs, hector us constantly that even that level of minimum wage is too restrictive for businesses to succeed, and it should be done away with. Together with the right to redundancy pay, or to appeal unfair dismissal (the qualifying term of which has already been doubled). There are already moves to legislate that industrial tribunals to consider unfair dismissal should be paid for by the plaintiff regardless of their success, which coupled with the massive slashing of entitlement to legal aid will ensure that this means of redress becomes less and less of a viable option for those sacked because they’re the wrong race, the wrong gender, the wrong sexuality, or simply because the boss doesn’t like their face.

Meanwhile, when the workers threaten to protest against legislation whittling away their pay and rights by threatening to withdraw their services, they’re portrayed as being selfish and uncaring by the political establishment (even Ed Miliband, who can’t tell us that strikes are wrong often enough). But if the rich threaten to withdraw their services, by moving abroad to a more desirable tax regime, politicians can’t kowtow to them quickly enough. A protesting worker gets demonised by the Daily Mail; a protesting business owner gets the tax laws changed in his/her favour. We live in a democracy (allegedly). Which of these groups could rightly be said to constitute a majority?

When we’ve reached a state of affairs when the business owner’s appreciation of his workers’ contribution to that business is non existent, and the business owner wants to take more for less from the workers, that relationship is by definition no longer symbiotic. In a situation where one party takes from another while giving nothing back, you call it what it is – parasitism.

Now, to be sure, the working class of today bears little resemblance to that of yesteryear. The wholesale destruction of Britain’s industrial base began by the 1979 Tory government, and carried on with such gusto by the ideologues of New Labour, left the country’s workers (those it had left) employed primarily in service industries. As much as possible was outsourced overseas to where maximum profit could be gained by exploiting workers used to far less.

But not everything could be shipped overseas. Today’s working class is the vast army of people who serve you in shops, who serve you in restaurants, who answer the phones in the few call centres still left in the UK. And they have nobody to represent them at all. The Tories, of course, never did, despite the Alf Garnett-alikes who always voted for them. The Lib Dems, protest though they will, are so keen to be centrist they represent very few. And the leader of the Labour Party, started by the Trade Unions precisely to give the worker a voice in governing the country of whose population they were the majority, now bleats about the need to appeal to “the squeezed middle”, following in the Middle-England chasing footsteps of his supposedly discredited predecessor Tony Blair.

There was a time when workers had representation, of course. Arguably too much of it. The collective bargaining power of the Trade Unions, hitched to the political clout of the Labour Party, was responsible for attaining many of the workers’ rights we have today, the ones being sliced away at by the Coalition. Thanks to Trade Unions, we no longer have children working sixteen hour days in factories, and workers have the ability to challenge perceived unfair dismissal.

But like so many given a dose of power, the unions grew arrogant. The heady scent of power rose to their heads so that, by the 70s, their fits of pique over the most trivial of issues would regularly bring production to a standstill, while madly unreasonable demands for pay increases crippled Britain to such an extent that the tremulous Heath government, embattled by power cuts and three day weeks, was effectively toppled as a result.

It was inevitable that there’d be a reckoning with their old enemies when the Conservatives got back into power in 1979. So it proved, with the Thatcher government introducing legislation that crippled them while peddling a media narrative that they were all nest-feathering “loony lefties” on the take. Militant union leaders blindly played right into their hands, with the bitter conflict of the mid-80s NUM strike effectively destroying their reputation for good.

So like a seesaw, the balance of power had swung from bosses to workers back to bosses again. And it continued to stay over on the bosses’ side with a “New Labour” party that sought to emulate its adversaries’ agenda. Tony Blair’s modification of the party’s defiantly socialist Clause IV allowed him to start peddling off the state’s assets with the same fervour that Thatcher and Major once did; under New Labour, we got the first public/private partnerships in the NHS, and the first academy schools.

Today, trade unions have so little sway in the private sector that only one in seven employees is a member. The public sector remains the only area in which unions are strong, which explains the Tories’ rabid desire to promote a private/public conflict. Demonise the “tax-sucking, gold-plated salaries” in the public sector, and you’ll have the private sector crying out that its working pay and conditions should be brought down to their level.

This is the political equivalent of shooting yourself in the foot. Let that happen, and bosses will be free to suggest that pay and conditions should be degraded yet further, with no one left to have a higher standard to compare with. Private sector workers shouldn’t be angrily demanding that their public sector equivalents get worse off; they should be angrily asking why they themselves aren’t better off.

Sadly, the current crop of unions are still doing themselves no favours wheeling out 70s-style caricatures like Bob Crow as their figureheads, and demanding full-on socialism. I may have some left wing views, but I think total socialism has, to all intents and purposes, been proved unworkable. The thing is, so has total free-market capitalism.

What’s needed to redress that balance is a compromise between the two. And what’s needed to achieve that compromise is a voice for that now-voiceless mass, the working class. If Labour won’t do it, and the unions can’t do it, maybe it’s time for some new kind of organisation that will, before the few persuade the many to give up their last pennies in exchange for cheap trinkets.

A tax is the best form of offence

One of the ‘joys’ of living through an ongoing economic crisis is that suddenly, everyone is an armchair economic pundit. Forget Robert Peston – you’ll hear a hugely diverse (often misinformed) range of opinion on this arcane, complex and, quite frankly, dull topic these days in every pub in the land. Not to mention a spectrum of political viewpoints all over the internet.

This week, the armchair economic pundits have mostly been talking about George Osborne’s typically divisive 2012 Budget. According to whose take you read, it’s a terrible budget, or a great budget, or an unmemorable budget, or an attack on the poor, or a much-needed shot in the arm for the business sector. As an armchair pundit myself, what I see in this Budget is a politically incompetent attempt to drive through more of the increasingly hardline Conservative ideology that’s been a signature of most Coalition policies since the Conservatives and their junior partners (or “human shields” – thanks for that one, Owen Jones) the Lib Dems got into power.

Poor little rich boys

Osborne called it “a Budget to reward hard work” in his Commons statement, but a not particularly close look is needed to tell that this only applies to very well-paid hard work. Key to this is the much pre-publicised dropping of the top, 50%, tax rate for very high earners to 45%. No amount of (not especially well-done) spin can disguise the fact that this is, essentially, a bonanza tax cut for the very rich, who in these straitened times are precisely the ones who need a tax cut least.

This is standard Conservative ideology. Osborne claims in one breath that it will remove a disincentive for those ‘wealth creators’ to shift their businesses to the UK, while in the next he says that the tax take from said ‘wealth creators’ will rise by five times due to other measures contained in the Budget. Well, which is it, George? If the 50% tax rate was putting them off coming here, how will other means of raking in even more money not do the same thing?

Shifting to another tack, the Chancellor and the Treasury point to a not-especially reliable ‘Laffer curve’ showing that this higher rate of tax actually decreases the overall tax take from the very rich. This, according to the Treasury, is because when the tax rate is too high, the rich find increasingly more ways to avoid paying it. Therefore, the theory runs, you’ll take in more tax at a lower rate, because those upstandingly moral wealthy people will happily pay all they owe, if that amount is generally lower.

This is an interesting perspective. “We can’t make the law work,” says the Chancellor, “so we’ll remove that law”. Interestingly, this is one of the most persuasive arguments to abandon the utterly ineffective prohibition of drugs; but somehow the same chain of logic isn’t applied there. It would be more in keeping with the government’s hardline stance on the drug laws (not to mention with Osborne’s stated aims on tax avoidance) to make more strenuous efforts to make sure the law is followed, not only to the letter but also to the spirit. But then that wouldn’t win all that goodwill from the very rich people who form a core part of the Tory voter base (not to mention donating about half of its party funds).

Laffer curves are a very subjective thing. The idea that the ‘peak’ tax rate after which revenue from taxation begins to decrease is at exactly 45%, or 50% for that matter, is mathematically simplistic. It’s also entirely theoretical until long term, reliable data has been gathered at varying tax points to make the comparison.

But Osborne claims to have this data. He points to the revenue gained from the 50% rate as being far less than the £3billion Labour claimed it would net when they introduced it in 2010 – less than a third of that, apparently. What he neglected to mention (but must surely be aware of) is that there is only data from the first full year of the tax. And because Labour gave a nice long term warning that the tax rise was going to be happening, many of those who would be affected chose to pay themselves dividends early, to avoid the new rate.

This had two big effects – it made the tax revenue for Labour’s last year in power artificially high (not that that could save them electorally), and made the first year’s takings at the new rate artificially low. According to the Institute for Fiscal Studies, had the new rate been maintained long enough, it might have brought in far more. And that’s presumably including the anticipated avoidance. If Osborne’s promised crackdown on tax avoidance happens, who knows, it could have brought in even more.

No, none of the Chancellor’s justifications for this tax cut being pragmatically and morally the right thing to do hold any water at all. Perhaps if they had someone with the skill of Alastair Campbell doing their spin, they might have. But they don’t, and this looks like exactly what it is – naked Conservative ideology, which clings to their traditional idea that the rich deserve to keep their hoarded wealth at the expense of the poor.

As if to prove this, Osborne also announced a further ‘crackdown’ on benefit fraud. So, if the poor (even the tiny fraction of them whose claims are fraudulent) flout the law, they must be severely punished. If the rich flout the law, that must mean the law is inconvenient and should be removed. Think about the message that sends – far from ‘detoxifying the Tory brand’, the current Cabinet seem intent on raising the age old spectre of ‘the Nasty Party’ – now with added Nastiness. Electorally this may not be a wise plan.

Gran, can you spare £10 billion?

And neither are the methods being used to make up the predicted shortfall. Most prominent among these, and causing howls of outrage among even the right wing press, is the so-called ‘Granny Tax’ – an apparent £10 billion tax raid on the pensions of the elderly.

This is not big or clever politically. The Chancellor is always seen as ‘Mr Nasty’; he’s the killjoy that makes it more expensive to drink, smoke, or drive your car. But mugging the elderly to give more money to the hyper-rich, that’s a new low. What next, raising tax revenue by stealing candy from babies?

Again, this could have been handled better with a little thought about the message. It’s actually tied in to the Lib Dems’ much vaunted increase in the tax free personal allowance – their manifesto pledge was that, in time, this would be raised to £10,000, benefitting everyone, but particularly low earners. A big step was taken towards that in the Budget, with the threshold being raised quite considerably to £9205.

There’s a rather nasty viewpoint that says pensioners have had it too easy during the savage cutting back of austerity, and it’s time for them to pay their fair share. That’s tied in to jealousy, plain and simple – the elderly have managed to buy houses and get good pensions – things that are rapidly becoming impossible today. So why should they get the nice stuff by virtue of having lived in easier times? Let’s drag them down to the same low standards the rest of us have to put up with!

Put like that, it actually seems a most un-Conservative policy – the elderly have worked hard for their assets, and surely standard Tory mantra would be that they should keep every penny. But this is New Conservatism, steeped in class prejudice that would make Thatcher (a grammar school girl) blanch with horror. What Osborne is doing will, predictably, only affect lower ‘earning’ pensioners. Their tax-free threshold, which normally rises with inflation, will be frozen at £10,500 for the foreseeable future. New pensioners will have it even worse – their threshold will be stuck at £9205. Not coincidentally, the same as the new tax free threshold for working people.

So the logical – and less politically explosive – thing to have done would be to make clear that it was this parity they were trying to achieve, and juggle both tax free thresholds until they were equal. Yes, some pensioners would lose out, but less than with what’s actually happening. And there might be some justification in that anyway, if spun right – which it wasn’t. It’s hard to fathom the reason for any experienced politician to handle it this way – it’s like Osborne’s actually trying to throw away the next election.

Corporation’s what you need

Perhaps he was hoping to use it to disguise yet more tax relief for large corporations – being panned for mugging the elderly might be the lesser of two evils compared to pandering to those all-purpose bad guys of unrestrained capitalism. In his quest to bring the level of Corporation Tax – on corporate profits – down from 28% to 22% (lower than almost every developed country), the Chancellor made another leap for glory by shifting it down to 24%.

On top of that, there’s an arcane rule about shifting corporate money from one tax region to another. If a UK-based company shifts profits from, say, Ghana to Switzerland, it currently has to pay the Treasury the standard corporate tax rate on the money made by doing so. Well, guess what? Not any more! Perhaps George was willing to take the hit on mugging grannies to keep that little wheeze from becoming more widely known.

This, of course, fits in with the Tory mantra that private industry will make everything better. Bring down the burden of corporate tax, the theory runs, and businesses will flock to the UK, bringing all that lovely money with them. Except, of course, they won’t be giving any of it to the state, because in Tory-world, only the free market can handle money responsibly.

This ignores two fairly well-proven things. Firstly, corporations exist to make as much money as possible. That’s their very raison d’etre. Do you really think they won’t still attempt to hoard as much of it as possible? And if they do, how will that help the economy? And secondly, it’s hard for a business to make any money in a consumer economy where the consumers have no money to spend – largely because they’re losing it all in tax to fund corporate tax breaks.

The fate of the Nice Ones

But what about the Lib Dems, and their much-claimed moderating influence on the ruthless, money-hungry class warriors of the Conservatives? Nick Clegg has been lamely pointing to a few measures that could, on the surface, look ‘nice’. Chief among these is the raise to the personal tax free threshold, which leaped much closer to the target figure of £10,000 by going up to £9205. That’s got to be a step in the right direction, surely?

Well, sorry Nick, but it’s not as good as it looks. For a start, the raising of the tax free threshold is accompanied by a lowering of the threshold for the higher, 40% rate – this has been frozen and will fall to £41,500 by 2014, meaning that more and more people will find their tax bills getting higher. Also, it doesn’t do much to help the truly poor, who may be below that threshold already.

And this policy won’t do much for the low earners it lifts out of tax either, because of a nifty little benefit technicality pointed out by the Citizens’ Advice Bureau. If you’re in that low-income bracket, chances are you’ll be claiming Housing Benefit and Council Tax Benefit. Well, these benefits taper off the more you earn, and here’s the thing – that’s net earnings, ie after tax. So while the new thresholds give £220 with one hand, the increased earnings mean that they take £187 right back. Leaving those low income households with the princely extra sum of £33 a year. Put like that, it doesn’t seem quite so generous, does it Nick?

OK then, how about the other measures, the ones that Simon Hughes claims make “the rich pay their fair share”, and Cameron says will bring in five times the revenue of the 50% tax rate? There are a couple of these, and on first glance they look quite good. Unfortunately, they’re basically fudged versions of the much more effective mansion tax originally proposed by Vince Cable, who shiftily tried to make them look good on last night’s Question Time with the haunted look of Dr Faustus discovering that his deal with Mephistopheles wasn’t as good as it looked.

These measures are to do with stamp duty, and initially appear to be a creditable attempt to tax assets rather than earnings – because they’re, sort of, a tax on property. Henceforth, stamp duty on properties worth over £2million will rise from 5% to 7%, but even more significantly, for properties bought by the tax dodging wheeze of using shell companies rather than individuals, it will go up to a whopping 15%. And there’ll be an annual duty on residential properties already owned by shell companies (though the rate for it has yet to be determined).

While this “mini mansion tax” is nice, the other rises have one basic flaw – they depend on the property actually being sold. It seems sheer madness to make confident estimates of the money you’ll make from property transactions, as there’s no guarantee of them happening at any predictable level. Hell, what if the rate of property purchase drops because of this measure? Where will the money come from then? Well, just maybe from the further £10 billion to be slashed from the welfare budget – at precisely the time more and more people are falling into poverty.

Nick Clegg is shiftily trying to claim that these measures constitute the ‘tycoon tax’ he so unexpectedly called for at the recent Lib Dem conference; despite the fact that what he outlined sounded nothing like this. He’s also saying that a proposed cap on tax relief fits the description (a good policy, nonetheless).

But I have to wonder what backroom deals were already in place with the Tories before he made that announcement. The Lib Dems attempts to spin this Budget as being anything less than naked Conservative ideology completely at odds with their own is sadly lacking here. Of course, the Conservatives’ spin isn’t too great either. The difference is that everyone expects the Tories to be nasty, even if they may have overreached themselves this time. Once again, though, I think we expected better of the Lib Dems. They’re beginning to appear almost powerless in the Coalition, and their leader’s constant attempts to defend extremely right wing policies are beginning to make him personally look like Vidkun Quisling.

Nothing in the world can stop them now?

Lib Dems aside, this should still be electoral suicide even for the Tories. Well, if they had any sort of worthwhile opposition, anyway.

Labour seemed to do all right out of the Budget. This is largely because opposing Budgets is easy, and opposing one this nasty was child’s play – even for the charisma vacuum that is Ed Miliband. But Labour still seem to have no coherent idea of what they would do instead. Vague promises are floated one week, then discarded the next. And the best their Shadow Chancellor can come up with is that he’d do more or less the same things – just more slowly.

There are three years to go before the next election, which might give both Labour and the Lib Dems the chance to shape themselves up into some kind of credible opposition to the Tories. Let’s hope so. Because right now, the fact that the Tories have the sheer gall to put through a Budget this mercenary and selfish seems to indicate that they think no-one can challenge them. And on the present evidence, they may well be right.

Horror Excess

For the last few days, the subject of boardroom excess has been brought firmly to the forefront of the news. That news has been firmly fixed on what should have been a government owned bank – the Royal Bank of Scotland, whose disastrous purchase of failing Dutch bank ABN AMRO was in no small part responsible for the near-collapse of the British banking system. The targets of media – and thus public – ire have been its former chairman, ‘Sir’ Fred Goodwin, and its current CEO, Stephen Hester. Politicians and their supporting press have had their knickers all in a twist over, firstly, Hester’s surprisingly large £963000 ‘bonus’, then Goodwin’s apparently undeserved knighthood.

Both narratives have reached a convenient resolution, so convenient it actually looks a bit contrived. And, as far as I’m concerned, so it is – contrived to distract people from a much larger systemic problem of which these two rapacious capitalists are merely the tip of the iceberg.

I can’t help wondering what backroom deals and political pressure caused first RBS’ chairman, Philip Hampton, to decline his own £1.4m share gift ‘bonus’, then Hester to finally relent and decide he wasn’t going to take his. Both made their decisions amid a mounting storm of public anger; but as usual where a press narrative is concerned, the shades of grey were barely touched upon.

The assumption that RBS is ‘publicly owned’ is close to, but not the actual, truth – the bailout of £45 billion of OUR money to rescue the bank from its own unthinking greed actually left 17% of the bank outside government hands. This was in the dying days of the New Labour government, when the party was somehow still desperate to avoid associations with its own socialist past; so buying the whole thing and effectively nationalising it was right out. Nobody, they thought, wanted to be reminded of British Steel, British Leyland and British Rail – ignoring the fact that privatisation has in many cases rendered formerly nationalised industries worse than they previously were.

So RBS, remained, effectively, a private organisation – albeit one in which the public had a vast majority share of 83%. David Cameron had a point when he said that it wasn’t the government’s place to interfere with remuneration arrangements in a private company; but as shareholder rather than legislator, it certainly could have had a say. It now seems that they did, and Hester’s £963000 bonus had actually been halved at the hamfisted insistence of our beloved Prime Minister. How he thought that kind of sum would be in any way more acceptable than twice the amount shows his trademark lack of empathy with those who aren’t hyper-wealthy millionaires, but hey, at least he made the gesture.

Trouble is, the gesture WE all saw was a middle finger to those who thought senior bankers were already being paid an insane amount, and the PR pressure didn’t let up. And the discussion of the issue was starting to lead onto a wider discussion of, well, if we can’t control the rampant excess of a company that’s 83% publicly owned, maybe, just maybe, something’s wrong with the entire system that allows this to happen.

I’m only theorising, but I wonder if, at this point, a quiet word was had from ‘someone’ in the Treasury (perhaps with the initials G.O.) with the board of RBS, to the effect that, unless they sacrificed their goodies this time, the whole comfy system might come crumbling down for the entire sector. And again, just theorising, but maybe Mr Hester was prepared to call the bluff, but Mr Hampton wasn’t. So, when Hampton gave up his bonus, it really did become politically untenable for Hester to cling on to his.

At this point, another banker was thrown to the wolves – step up, Sir Fred Goodwin, the ‘mastermind’ behind the ABN AMRO takeover and chief architect of RBS’ near-collapse. There’d been quiet rumbling for a while about the prospect of ‘punishing’ Goodwin by stripping him of his knighthood. Lest we forget, this knighthood was given out – in happier financial times – by New Labour in yet another attempt to prove that they weren’t so different from the Tories when it came to looking after The City. There’s a revealing clip of Harriet Harman defending this at the time by saying she “believed” the honour wasn’t for services to the banking sector, but more because Goodwin was such an all round nice bloke.

Buckingham Palace would beg to differ. It was indeed for ‘services to the banking industry’ that Goodwin was knighted, although with hindsight it’s easy to wish the Queen hadn’t just used that big sword to cut his head off and save her country a lot of money. Now though, with the public mood towards bankers something akin to their feelings for Nazi war criminals, it’s been arranged that Goodwin will no longer be “Sir Fred” and revert to plain old “Mr Goodwin”.

This was arranged by a little seen body called the Forfeiture Committee, staffed by civil servants and entirely apolitical – you know, just like the whole Honours system isn’t. There is, undoubtedly, a certain amount of satisfaction to be gained from Goodwin’s stripping of his title. Mind you, I at least might have preferred it if he’d instead been stripped of his pension – a pension that leaves him struggling on a mere £350000 a YEAR from the funds of a bank that WE paid to rescue from his calamitous mismanagement. Still, could have been worse – the original pension was nearly twice that amount, but Goodwin grudgingly ‘agreed’ to sacrifice half of it at the urging of then Chancellor Alastair Darling, himself being leaned on by his Opposition equivalent – one Mr George Osborne. How times change!

So yes, I’d have been happy for him to keep his meaningless knighthood if he’d given back the pension that we’ve paid for. After all, the knighthood’s costing us nothing. And I suspect “Mr Goodwin” has enough of a personal fortune from his obscene pay while still working for RBS that he could probably manage without a pension at all.

Richly deserved fates for both Hester and Goodwin, many are saying, and I find it hard to disagree. Many others, however, are saying that these men have been sacrificial lambs on the altar of public opinion, and I find that hard to disagree with too – but not for the reasons most are saying it. Stripping Hester of what was actually a share gift rather than a cash settlement doesn’t actually achieve very much; he couldn’t have sold the shares until they vested after four years, in which case it would surely have been in his interest to make RBS do well, which presumably is what we want. And removing an archaic medieval title from Goodwin, while it’s nice to see him humiliated, is little more than a meaningless gesture.

No, the reason these two men come across as scapegoats is that, presumably, we’re meant to be satisfied with these two highly-publicised bits of ‘justice’ and stop talking about the problem they actually represent – the increasingly insane levels of remuneration at the top of not just banks but every substantial private organisation.

Yes, Hester has given up his bonus – but he still draws a ‘basic’ salary of £1.2m. This, it is argued, is because it’s the going rate for a talented CEO, and such a person is necessary to restore ‘confidence’ (a word that so easily precedes ‘trick’) in the RBS. The tradition of ‘bonuses’ is justified in the same way – they must be doled out, regardless of merit, because everyone else does it (although this seems to be a tradition largely confined to the UK and the US). Indeed, so great is the expectation of this kind of entitlement among bankers now that the former employees of failed bank Dredsner are actually suing their now-defunct employer for the $66m in bonuses they didn’t get this year – because the bank went bust. That’s some brass neck.

Meanwhile, CEOs and board members routinely award themselves annual pay rises of around 40%, at a point when the lowest ranking members of staff are seeing regular pay freezes. Just ask the employees of HMV, whose Christmas bonus has now been abolished, and have been told that Bank Holidays no longer count as public holidays, so must be worked by all without overtime pay. So they’re working slightly harder than most board members, whose jobs are so undemanding that many sit on multiple boards drawing huge salaries from each.

As with so many political issues, there are two aspects to this – the moral and the pragmatic. A moral argument on the topic is almost impossible to win, because everyone’s morals are subjective. Anyone criticising the state of affairs regarding income inequality is immediately branded as using “the politics of envy” by supporters of the status quo. Bloody right we’re envious – when Tesco CEO Philip Clarke gets paid £6.9m a year while his lowly employees have to use tax credit just to survive, I’d say there was a right to envy. But envy doesn’t mean critics of the system want to be in the same position as Clarke; it’s not a binary argument. They just want some form of fairness restored to a system in which the tax rate tops out when you’re earning £150000 a year, and men like Clarke earn many multiples this amount.

Still, some argue that this IS a fair system – I can see the point about rewarding hard work and keeping the state out of it. That’s plainly not the case – but it’s their moral stance, and unlike religion, it’s virtually impossible to proselytise your own moral code. But there’s the pragmatic argument too, which is harder to shoot down. There’s a finite amount of money in the system. If CEOs and board members continue to get annual raises of 40% or more, they’re increasingly going to be hoarding the vast majority of that finite amount at everyone else’s expense.

I say “hoarding”, because that’s what they do. They’re not actually spending these vast sums of money, which might help stabilise the economy. No, it sits, often untaxed, in foreign banks and tax havens. It’s been estimated that, currently, there is $18 TRILLION worth of untaxed assets sitting in offshore havens. That is, I believe, more than a third of the GDP of the entire planet. And if the rich keep getting 40% pay rises, that figure is only going to get larger.

Unfortunately for such vested interests, the issue has become a hot political topic, even with the apparent dismantlement of the Occupy movement. It was unsurprising to see Barack Obama address income inequality in his State of the Union address this month; but more surprising to see Republican hopeful Mitt Romney vilified by his own party for paying a meagre 15% tax on his gigantic income. Ordinary Republican voters, it seems, are no longer being conned into voting against their own interests by the vague promise that they too can be hyper rich and benefit from the system.

Over here, motivated by political necessity, there have been things afoot too. Many are somewhat ineffectual, if well-meaning. Vince Cable’s much-publicised proposals on curbing boardroom excess strike me as weak at best. Full disclosure of executive pay may well lead to execs saying, “why aren’t I getting as much as he/she does?” Shareholder voting on pay rises is largely irrelevant when most shareholders are vast, impersonal pension funds. Having employee representation on pay committees is a nice idea, but hinges on the concept that execs wouldn’t have the cheek to vote themselves massive increases when faced by their lowest ranks across a table. As we’ve seen time and again, execs have this much cheek and much more besides.

Other ideas, though, seem rather better – and sadly less likely to happen. The Lib Dems’ proposed ‘mansion tax’ on properties above £2m in value is quite a good one – after all, you can’t shift your house to an offshore haven. Trouble is, it’s likely to be shot down by their Tory partners in the interests of fairness –after all, Mr Cameron and his Chipping Norton friends do have VERY big houses.

Then there’s Land Value Tax – again, you can’t move land out of a taxation regime. To some extent, countries like Australia do this already. Perhaps by coincidence, Australia’s economy is doing rather well. However, despite some Lib Dem fondness for the idea, nobody else seems to want this one either.

Then there’s the rather more bonkers idea espoused by a few left wing commentators recently of a one off 20% ‘wealth raid’ on the assets of the tiny proportion of the hyper-rich. This, the commentators argue, could raise £800bn at a stroke – more than enough to pay off the £149bn deficit, and start making a dent in the national debt itself. Trouble is, I can’t see how this would work realistically, when so much of that wealth is based in property or moored anonymously offshore.

As with so much of economics, there are plenty of proposed remedies floating around at the moment, and it’s hard to see which are workable, realistic or fair (there’s that moral judgement again). But the only thing that is clear is that the current system is unsustainable. CEOs aren’t going to sod off overseas if you deny them the contents of Scrooge McDuck’s Money Barns – somehow Mervyn King manages to run the Bank of England on a mere £300000 a year, and he’s not clamouring for a giant increase. No, this whole thing needs more comprehensive debate than this long ramble can cram in, but it’s a debate that shouldn’t be shut off because we’re sated with the sacrifice of two of the small fry villains of the tale.