In light of the articles by Simon Jenkins (The bankers lied. And Darling, merely a puppet on their string, knows it, 12 March) and Mehdi Hasan (It's defeatist nonsense to talk of a crisis of leftwing thinking, 12 March), it seems evident that there is the need for a rearticulating of the political discourse. The hegemony of neoliberal thinking has defined the political space for 30 years, so much so that even in the present crisis, when we all should be marching on the streets against the bankers, New Labour is still running in fear of framing the debate in social democratic terms.

For the 30 years the right have had a stranglehold on how we define freedom. The political classes have been fearful of any reference to the state as a means of solving problems. Individual freedom, essentially defined in terms of freedom from the state, has been their mantra. For example, George Osborne's first reaction to the nationalisation of the banks was to jump enthusiastically up and down, claiming that old socialist nationalisation is here again. Cameron is careful that his slogan that there is such a thing as society is followed up by a clear rejection of any idea that this means a bigger state.

The current crisis has left both parties searching for ways to rearticulate a progressive politics, but it is up to the left to grab this opportunity, because they won't have another like this, to reshape the political discourse and redefine the state and its relation to individual freedom. This is a hegemonic struggle to reclaim the terms of liberty and equality in social democratic terms.

Robert Proni

London

• Donald Hirsch is quite right to say that decent employers should pay a living wage of at least £7.14 an hour, and more in expensive areas (The wages of dignity, 10 March). However, we also need to realise that the legal minimum wage of £5.80 an hour is not being paid to many thousands of employees. The root of the problem is that the statutory enforcement powers are held by Revenue & Customs, and they are failing to do their job properly. That is hardly surprising as there are only 123 enforcement staff for the whole of the UK.

In Hackney, where I live, only 258 investigations have been carried out in seven years. Anecdotal evidence of illegal avoidance abounds, but the onus is on the individual to complain, and few feel able to do so. Ideally the enforcement powers should be transferred to local authorities, but in the meantime high-profile awareness campaigns could be organised by councils with advice and information points located in their buildings. This policy will be part of the Hackney Labour manifesto for the forthcoming local elections.

Tim Webb

London

• Neil Kinnock (Letters, 10 March) utterly fails to comprehend the burning sense of disillusionment that has driven so many former Labour supporters either into cynical abandonment of politics or, like John Kampfner, to embrace the Lib Dems. The charge against the New Labour project is not that it did not deliver the benefits he lists. It did, and there were others which curiously he omits, above all the lancing of the Northern Ireland carbuncle and significant constitutional reforms – devolution and human rights legislation. The charge is that it squandered its massive parliamentary majorities and the goodwill that the electorate bestowed on it to transform a divided, sick society.

On the contrary, it took to its bosom the neoliberal ideology that nourished that divide, extending privatisation; it renounced and even demonised public sector initiatives and went back on the welfare state concordat that was the hallmark of the postwar Labour settlement. So, Labour administrations have presided over the widest gulf ever between the haves and have-nots and now the inevitable massive recession. We have witnessed a generation of politicians intent on feathering their own nests, the expenses "scandal" being a minor part of this. Not to speak, as Neil Kinnock dare not, of the criminal adventure that was the Iraq war. I, a onetime Labour activist, like John Kampfner, have joined the Lib Dems, who I see as a catalyst for, and working partner of, a rejuvenated Labour party once it is purged of the New Labour virus.

Benedict Birnberg

London

]]> http://www.businessgaze.com/letters-fear-and-loathing-in-new-labour/feed 0 http://www.businessgaze.com/the-bankers-lied-and-darling-a-mere-puppet-on-their-string-knows-it-simon-jenkins http://www.businessgaze.com/the-bankers-lied-and-darling-a-mere-puppet-on-their-string-knows-it-simon-jenkins#comments Thu, 11 Mar 2010 23:00:00 +0000 Simon Jenkins http://www.guardian.co.uk/commentisfree/2010/mar/11/banks-lied-darling-puppet-city

Britain has paid a horrific price for allowing the City to dictate credit policy. Yet there is no inquiry, no questioning, only silence

Still no inquiry. Still no answers. A trillion pounds has been devoted over the past 18 months to protect Britain's financial system from alleged Armageddon, with not a murmur of value for money. This stupefying sum is more than has ever been spent on any project by any government in British history.

We know where the money came from but we do not know if it was necessary, nor who now has it. We know only that, a year on, Britain is experiencing a worse recession than any comparable country. The lack of accountability, the sheer lack of curiosity from the political community, is amazing.

The nearest to an explanation came from the man responsible, Alistair Darling, on Michael Cockerell's recent BBC documentary on the Treasury. If he had not acted in October 2008 as he did, Darling asserted, "the bank doors couldn't have opened, cash machines wouldn't have functioned. All over the world people wouldn't have got money". Who says?

The reality is that at the time, a year after Northern Rock and with Lloyds/HBOS and RBS faltering in the wake of the Lehman Brothers collapse, Whitehall was in policy turmoil. Every option was in the air. Darling and his patron, Gordon Brown, were in perpetual conclave with advisers such as Lord Myners and Lady Vadera and Downing Street's "UBS mafia". Calls were coming from important City figures saying such things as, "We can't go on beyond lunchtime … Give us the money".

Faced with a global asset bubble of some $290 trillion about to burst, a frantic Darling started throwing millions, then billions, then a trillion at underpinning the banks' near worthless "casino" debts. He never spent such money on indebted homeowners or indebted manufacturers or indebted African states. He did it to banks because they told him they were too big to fail. Advised by bankers, surrounded by bankers, obsessed with bankers, Darling paid.

I would like to know why. Ask those involved and they go wide-eyed and mutter "Armageddon", rather like Tony Blair explaining the Iraq invasion. To these people, not letting banks fail was not an option but a creed. They cannot explain what is "wrong" with taking hold of a reckless bank in trouble, guaranteeing its deposits (and cash machines) and continuing to lend against a Treasury guarantee, while dumping the casino activities into administration. Shareholders lose out, but that's capitalism. Talk of bank doors closing is rubbish.

Andrew Ross Sorkin's Too Big To Fail, the chaotic but gripping saga of September 2008, tells of Wall Street and Washington playing with the "good bank, bad bank" option over and again. At one point Lehman's toxics were to be hived off into a SpinCo (dubbed ShitCo by Wall Street). It did not happen, but a version was tried at AIG. In Britain in 2007, Northern Rock was both nationalised and reorganised on a good bank, bad bank basis. The good bank reported this week, and should soon repay the taxpayers their investment. The policy worked.

So why were RBS and Lloyds/HBOS not fully nationalised, rather than given unconditional largesse? Speaking at this year's Spectator lunch, Darling boasted that "I own four banks". They appear to own him. They assured him they would use his money to lend to businesses and homeowners to avert recession. They lied and Darling knew it. He knew his money would disappear into underwriting the banks' casino debts and overheating the stock market.

By December 2009, a year after the bailout began, bank lending was not stagnant but declining at an unprecedented rate. Still Darling did not relent. Indeed he made lending harder by increasing VAT, reducing high street demand and rendering commercial lending more, not less, risky. Meanwhile the Bank of England poured cash into bank balance sheets. An Economist headline put it pithily: "Banks fine: pity about the customers."

Darling did not even require banks to curb their extraordinary bonuses, even when they consumed a large share of reported losses. The American financier, Warren Buffett, famously protested that banks were "being run for their employees… with lucrative paydays that enriched people who are not particularly intelligent and add little value". Since he claims to own them, Darling might at least explain why he was further enriching them at public expense.

Last year John McFall, the Labour chairman of the Commons treasury committee, argued for a "state bank". There were four already, but economically inert. When RBS returned to the casino tables, the money it spent was draining from the real economy in Darling's repeat of the Thatcher/Howe recessionary squeeze of 1980-81. At a time when consumer demand was collapsing, the government found itself unable to respond with more VAT cuts, pensions bonuses, higher social security and more public projects, in other words a classical Keynesian answer to a slump.

That is what Germany and many far eastern countries did, with benefits rises, tax holidays and consumer scrappage schemes. The British government did the opposite. It ended such schemes, increased VAT and made deep cuts in government (which means also private) spending. Small wonder one in four high street stores might be facing closure – but no more banks. Darling continued to claim that his printing of new money through quantitative easing was aiding business. Yet each week the financial pages reported how the extra money was evaporating, most of it disappearing overseas. It would have been better to adopt the old monetarist answer to recession, of dropping bank notes on shoppers from helicopters.

I appreciate there may be arguments against this analysis, but it would be good to hear them. Why did Darling not let HBOS or Lloyds fail, merely guaranteeing their deposits? Alternatively, why did he not nationalise and split up the ailing banks in October 2008? Again, if they really were too big to fail, as they alleged, why has he not made them emphatically smaller, so when they fail next time they do not drag the economy down with them?

Gillian Tett's book on the psychology of credit greed, Fool's Gold, shows the corrupting effect of unfettered derivatives trading on the whole financial system. Darling has done nothing to mitigate that effect. The world is alive with talk of curbs on bonuses, hedge funds, short trading, proprietary dealing and transaction taxes. There is talk of stress tests, living wills and higher reserve ratios. In almost all these arguments, Labour ministers are on the side of unregulated banking and against further controls. They are the wildest of free-marketeers. Brown and Darling have gone native and become puppets on a banker's string.

Britain has paid, and will go on paying, a horrific price for this government allowing bankers to dictate credit policy after 2008. To avoid ministers suffering the ideological odium of proper nationalisation (as opposing to bailing-out), Britain is being forced to lose jobs, firms, infrastructure, prosperity and the happiness it brings.

Too big to fail has taken a savage toll on the economy. If it was worth it, I would like to see the account. If not, someone should pay. Yet because the policy was backed by all three main parties, there is no questioning, no inquiry. All is silence.

]]> http://www.businessgaze.com/the-bankers-lied-and-darling-a-mere-puppet-on-their-string-knows-it-simon-jenkins/feed 0 http://www.businessgaze.com/cable-wireless-facing-shareholder-revolt-over-executive-pay http://www.businessgaze.com/cable-wireless-facing-shareholder-revolt-over-executive-pay#comments Thu, 11 Mar 2010 22:00:02 +0000 Richard Wachman http://www.guardian.co.uk/business/2010/mar/11/cable-and-wireless-pay-shareholder-protest

• John Pluthero in line for £11m under new pay plans
• Investors ready to vote against 'excessive' pay awards

Cable & Wireless faces a shareholder revolt over plans to pay senior executive John Pluthero up to £11m under a controversial incentive scheme that has already drawn fire from corporate governance bodies.

The company is also braced for protests against "golden handcuff" proposals that would lock in senior managers at one of the companies that is being demerged and separately floated on the stock exchange this month. Under the terms of the scheme, three executives would be in line for millions of pounds if targets are met.

Pluthero, a former boss of the internet company Freeserve, has already received £8m under the cash part of the company's long-term incentive plan (LTIP), but stands to collect another £3m by 2011 if he can boost the group's share price. Details of his pay arrangements are contained in the company's demerger document, which sets the stage for a breakup of the group.

Andy Kerr, of the Communication Workers Union, said: "John Pluthero is completely out of touch with both the business world and his staff. He should pay this bonus back and give Cable & Wireless workers a decent pay rise. This scandalous bonus culture for senior managers is disgraceful." The company has recently cut 1,900 jobs.

Investors say they are ready to vote against the firm's remuneration report at the annual meeting this summer because pay awards at C&W are excessive.

One shareholder who spoke on the basis of anonymity said: "C&W shouldn't be inflaming tensions at a time of heightened investor sensitivity to excessive pay in the wake of the world financial crisis.Executive remuneration has become an explosive issue."

But the company said: "We pay our executives what we consider to be a reasonable rate, in line with their duties and comparable packages at peer companies." It added that Pluthero, chairman of C&W Worldwide, and other managers had increased shareholder returns by 44% since 2006. Richard Lapthorne, group chairman, said that shareholders had "benefited" from the scheme, which had underpinned the company's revival. Shares are up 30% in three years.

The company has published a document that sets the stage for separate listings of its UK and international businesses, known respectively as C&W Worldwide and C&W Communications.

The document also outlined proposed modifications to C&W's LTIP, which last year paid out £32m to senior managers. Changes to the plan are designed to pave the way for big share awards for exceptional performance for Jim Marsh, chief executive of C&W Worldwide; Tim Weller, finance director, and Ivan Gunatilleke, chief operating officer. The proposed awards for Marsh and his colleagues reflect how C&W is trying to ensure that managers responsible for the turnaround of the British business stay at the company well beyond the demerger.

But the proposals, which will be discussed by the company with investors after the split, have angered activists who are concerned that C&W's pay policies breach best practice. Alan MacDougall, of corporate governance champions Pirc, said: "The fundamental problem here is that C&W is encouraging risk because if executives really want these rewards they could be tempted to make decisions that are not in the long-term interests of the company or its shareholders."

The demerger will begin on 22 March with the listing of C&W Communications. C&W Worldwide will follow on 26 March.

Opposition to C&W's pay plans has been the norm since 2006 when it introduced a private equity-style LTIP that was designed to pay executives cash of up to 10% of growth in shareholder returns. Shareholders said there was not enough downside and that hurdles were based on too short a timescale. The scheme could have paid out £220m in total if C&W's shares had performed even more strongly.

Last year, C&W suffered one of the biggest shareholder rebellions of the year when 38% of its investors failed to endorse its pay policy after the Association of British Insurers objected to its remunerationstance by issuing a "red top" alert.

Shareholder rebellions

Jan 2009 A majority of shareholders vote against the remuneration report of Bellway, the UK housebuilder. Widespread anger because management pay themselves bonuses despite failing to meet performance targets.

April 2009 Royal Bank of Scotland shareholders vote overwhelmingly against the remuneration policy proposed by the bank's board. UK Financial Investments, the body set up to oversee taxpayers' interests in the bank, puts its voting weight behind the protest, fuelled by the pension awarded to Sir Fred Goodwin, RBS's disgraced former chief executive.

April 2009 More than a third of BP shareholders vote against the company's executive long-term incentive plan.

May 2009 Shareholders turn on Royal Dutch Shell, the multinational oil group. In one of the biggest investor rebellions over directors' pay, about 59% of Shell shareholders vote down the company's remuneration report. They objected to the discretionary award of bonuses for 2006-08, despite the company's disappointing financial performance.

May 2009 Investors vote against plans by Provident Financial to pay a bonus and double-digit salary increases to senior executives.

December 2009 More than 55% of shareholders vote against the Punch Taverns pay report in protest at grants of shares to directors and bonus payments to directors in the wake of dismal trading.

]]> http://www.businessgaze.com/cable-wireless-facing-shareholder-revolt-over-executive-pay/feed 0 http://www.businessgaze.com/john-lewis-shares-151m-in-bonuses-with-staff http://www.businessgaze.com/john-lewis-shares-151m-in-bonuses-with-staff#comments Thu, 11 Mar 2010 20:51:08 +0000 Zoe Wood, Julia Finch http://www.guardian.co.uk/business/2010/mar/11/john-lewis-staff-share-bonus

• Department store and Waitrose profits up 9.7%
• All grades of staff receive payout worth 15% of salary

More than 70,000 staff at the John Lewis Group have been handed a bonus equal to nearly eight weeks' pay after the department store and Waitrose supermarket chain posted a near-10% rise in profits.

The £151m bonus payout comes after a storming year for Waitrose and a big rebound in the fortunes of the 29 department stores, which were badly battered by the recession early last year.

The payout is equal to 15% of salary, and all permanent staff, from the postroom to the chairman, get the same level of reward. Last year they received 13%, while in 2008, before the recession set in, they earned 20%.

The scale of the payout was unveiled in stores all over the country at 9.30am. In the Oxford Street store 1,000 staff hung over the balconies to hear a countdown by the store's boss, Noel Saunders.

"I didn't expect 15%," said Ali Cook, a manager in the beauty department. "We had to work really hard and pull together to achieve this."

Marcelo Cueva from Ecuador, who works in the postroom as an administration assistant, said: "I'm going to pay off my debt and have a bit extra for a holiday in Italy."

The department store chain's managing director, Andy Street, intends to spend his payout on a modern landscape painting.

The full-year profit, at £307m, was 9.7% ahead of 2009 and the results represent a U-turn since the half-year stage, when group profits were down 20% and the department stores were down more than 50% as homeware sales collapsed. Homewares generate a third of John Lewis sales and a bigger proportion of profit.

The group chairman, Charlie Mayfield, said Christmas spending had been much more robust than economists and commentators had predicted. The department stores recorded their best ever festive sales, with Oxford Street taking twice the normal £1m-a-day before Christmas. Some 400 head office staff were sent out to the stores to help with the push.

Total department store sales, which went from gloom to boom over the year, climbed 4.3% to £2.9bn. Underlying profit rose from £154m to £193m.

At Waitrose sales climbed 121% to £4.5bn, defying predictions that the upmarket grocer would be hit by the recession. Underlying profit was up 31% to £280.3m.

Waitrose was the fastest-growing big grocer last year, with sales driven by its new Essentials range of basic foods. The label now covers 1,400 items, generated £500m of sales in its first year and the managing director, Mark Price, said 60% of the trade is incremental. The chain has also opened more stores and has ambitious plans for more outlets, in locations ranging from motorway service stations to the Middle East.

Both arms of the business have focused on cutting costs. Street said the department store chain employs only 22 fewer staff than a year ago – but that figure includes hundreds of staff recruited for a new department store in Cardiff and its new-look homewares outlet in Poole. There have been redundancies among backroom staff in stores and at a distribution centre in Stevenage. Street refused to rule out more job losses this year, saying cost saving was "absolutely an ongoing process".

He said changing shopping habits, with more sales online, meant job losses, and new recruitment, were inevitable: "It is not about cuts, it is about a change in the nature of employment. There will be some groups of partners who cannot go on doing the jobs they are doing now, and our partners understand that."

Price said Waitrose has taken costs out of the grocer's supply chain, but insisted it had not put pressure on suppliers to cut their prices: "We don't squeeze suppliers. We work collaboratively with them to find mutual advantage for both." Many suppliers, he said, had been able to reduce their prices as a result of the larger orders being placed by the growing business.

The grocer's operating margin – a key measure of efficiency – is now 6.2%, up 96 basis points on a year ago and better than Morrisons, Tesco and Sainsbury's.

Mayfield said the first five weeks of the new financial year had been good, with like-for-like sales at the department store up 15% on a year ago and Waitrose up nearly 3%. However, he is cautious about the outlook for the rest of this year and seemed to accept that the VAT rate was likely to increase from its current 17.5% level later this year, in the wake of the general election: "If VAT goes up, it is generally unhelpful to retailers, but the economy is facing a real challenge and whoever is in government will have to face that."

Leader comment, page 34 →

]]> http://www.businessgaze.com/john-lewis-shares-151m-in-bonuses-with-staff/feed 0 http://www.businessgaze.com/all-john-lewis-staff-to-share-151m-bonus-pot http://www.businessgaze.com/all-john-lewis-staff-to-share-151m-bonus-pot#comments Thu, 11 Mar 2010 10:05:56 +0000 Julia Kollewe http://www.guardian.co.uk/business/2010/mar/11/john-lewis-staff-share-151m-in-bonuses

Staff bonus amounts to 15% of basic salary and is higher than last year

The John Lewis Partnership has handed an annual bonus of £151m to its staff after enjoying a near-10% rise in profits.

The group, which operates 224 Waitrose supermarkets as well as 29 department stores, announced profits, excluding bonuses and tax, of £306.6m this morning.

The John Lewis group is a partnership owned by its 69,000 permanent staff, and everyone – from the chairman Charlie Mayfield and the managing director Andy Street down to shelf-stackers – get the same percentage payout.

The higher-than-expected staff bonus amounts to 15% of basic salary, equal to nearly eight weeks' pay. Last year workers received 13%, while in 2008, before the recession set in, they were handed 20%.

At the half-year, the group's profits were down 20% and would have been far worse without its upmarket Waitrose chain, which defied expectations that shoppers would defect to cheaper rivals during the downturn.

Waitrose introduced an Essentials range of basic foods which was popular with shoppers, and has been the star performer among grocers over the past year. Last week, its managing director, Mark Price, said that he aimed to double sales to £10bn in a decade.

The John Lewis chain also had big expansion plans, but has ditched its goal of opening 10 new department stores because of the recession. Instead, it is launching smaller John Lewis at Home stores in retail parks. The first, opened in Poole last October, has beaten its targets and a second is planned in Croydon. Two more were approved last week, and if they also perform well, a further 50 will be rolled out.

]]> http://www.businessgaze.com/all-john-lewis-staff-to-share-151m-bonus-pot/feed 0 http://www.businessgaze.com/disclosing-bank-bonuses-its-not-just-gawping http://www.businessgaze.com/disclosing-bank-bonuses-its-not-just-gawping#comments Wed, 10 Mar 2010 21:28:15 +0000 Nils Pratley http://www.guardian.co.uk/business/2010/mar/10/rbs-walker-banks-bonuses-disclosure

Knowing the number of 'middle earners' at a bank, if that means £500,000 a year, tells us a lot about risk

How many employees of, say, Royal Bank of Scotland earn £500,000 or more? It's impossible to guess. The only vaguely relevant piece of information was the one RBS chairman Sir Philip Hampton let slip last month – that 100 members of staff were awarded bonuses of £1m or more last year. Would a £500,000 threshold that takes in all elements of pay reveal many hundreds, or perhaps thousands?

We may soon have answers – not just at RBS but across all big banks. The government set out proposals requiring banks to disclose pay details, in bands, for those earning more than £500,000. Prepare to be amazed.

Critics will say a £500,000 threshold, rather than the £1m level proposed by Sir David Walker, invites gratuitous gawping. The point of disclosure, they say, is to help shareholders to assess risk and individuals earning less than £1m don't present much danger.

It's a view but, come on, £500,000 is a chunky sum. "Middle earners" could represent a significant cost and investors also want to judge if a board is living up to Stephen Hester's aim of paying "the minimum we can get away with". More information could be useful.

]]> http://www.businessgaze.com/disclosing-bank-bonuses-its-not-just-gawping/feed 0 http://www.businessgaze.com/bank-pay-disclosure-could-start-at-500000 http://www.businessgaze.com/bank-pay-disclosure-could-start-at-500000#comments Wed, 10 Mar 2010 09:06:43 +0000 Julia Kollewe http://www.guardian.co.uk/business/2010/mar/10/bankers-pay-disclosure-500000

Government proposals go further than the recommendations of City veteran Sir David Walker, who had suggested that banks should disclose how many people are earning more than £1m

Banks could be forced to reveal how many of their employees earn more than £500,000 a year under new government proposals. This goes further than the recommendations of City veteran Sir David Walker, who had suggested that banks should disclose how many people are earning more than £1m.

The government has drawn up new regulations on greater disclosure on pay for the top earners at banks, which will be published later today. This will include proposals for narrower disclosure bands than Walker suggested.

They are expected to show that hundreds, perhaps thousands, of City bankers become millionaires each year.

Speaking at the British Private Equity and Venture Capital Association this morning, City minister Paul Myners said: "From the outset of the crisis, the government has been focused on eliminating rewards for failure and ensuring that remuneration does not incentivise excessive risk taking.

"And we will continue to lead on this issue - David Walker's proposals will be implemented to give shareholders much more power and information to shape remuneration policies at banks. And in some cases we may go further. Later today the government will publish draft regulations on greater disclosure on pay for the top earners at banks.

"This will include proposals for narrower disclosure bands than Walker proposed, starting with salary packages below the £1m floor that he suggested. We will consult on that idea, but as the chancellor has said - most people are convinced that far more disclosure is important, because they will then be able to see precise remuneration practices."

It is understood that the pay disclosure bands will be starting from £500,000 and go up in £500,000 increments to £5m, and then up from £5m by £1m increments. Pay packages include salary, cash bonuses, deferred shares, long term award and pensions.

In his review of corporate governance last year, Walker proposed bands of £1m to £2.5m and £2.5-£5m and bands after £5m.

]]> http://www.businessgaze.com/bank-pay-disclosure-could-start-at-500000/feed 0 http://www.businessgaze.com/sir-martin-sorrell-raises-785000-through-wpp-shares-sale http://www.businessgaze.com/sir-martin-sorrell-raises-785000-through-wpp-shares-sale#comments Tue, 09 Mar 2010 14:11:58 +0000 Mark Sweney http://www.guardian.co.uk/media/2010/mar/09/wpp-sir-martin-sorrell-shares

• WPP's chief executive sells 122,536 shares to fund tax bill
• Sorrell defers receipt of further 562,000 shares, worth £3.6m

Sir Martin Sorrell has sold about £785,000 worth of shares in marketing services company WPP, owner of ad agencies including Ogilvy and JWT, to fund tax payments.

Sorrell, the chief executive who presided over the reporting of WPP's annual results for a "brutal" 2009 on Friday, sold 122,536 shares in the company yesterday.

WPP's share price closed at 641p yesterday meaning the sale probably made Sorrell about £785,000.

On Saturday Sorrell became entitled to receive 160,433 shares, worth just over £1.02m at WPP's current share price, as part of the firm's executive share awards scheme.

Yesterday he became entitled to another 562,245 shares, worth more than £3.6m at WPP's current share price, under the leadership equity acquisition plan. However, Sorrell deferred receipt of these shares and has until 30 November 2012 to receive them.

As of today, Sorrell and his "family interests" control or have rights in 17m shares in WPP, which represents a 1.356% holding in the company.

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]]> http://www.businessgaze.com/sir-martin-sorrell-raises-785000-through-wpp-shares-sale/feed 0 http://www.businessgaze.com/unions-defend-too-narrow-interests-phillip-inman http://www.businessgaze.com/unions-defend-too-narrow-interests-phillip-inman#comments Tue, 09 Mar 2010 08:00:04 +0000 Phillip Inman http://www.guardian.co.uk/commentisfree/2010/mar/09/civil-service-union-mark-serwotka-pcs

Mark Serwotka's PCS avoids tackling the inequality that sees baby boomers stay rich at the expense of future generations

When Mark Serwotka, the leader of the PCS civil service union, calls for bankers to be denied contractual pay and bonus hikes in the same way the government intends to cut redundancy and pension rights for civil servants, he has a point. Last year, thousands of bankers received bonuses despite the near-collapse of their institutions because lawyers trooped into the Treasury to announce that a rash of lawsuits would immediately hit the courts if the government banned contractually agreed bonuses.

Of course, ministers bottled a legitimate challenge to the City and its bloated, greedy practices. The gauntlet was there to pick up. The fight was necessary. It didn't happen. Bankers got away with their illegitimate, ill-gotten gains.

This year, we were blackmailed with the threat that bankers would decamp to foreign lands if their pay was restricted. Suffice to say, we will never know. They were handsomely paid, by and large, and few made the trip to Switzerland.

Yet Serwotka, who is leading about 250,000 civil servants on strike today as yesterday, knows that two wrongs don't make a right and his defence of civil service benefits is almost as ludicrous as the rearguard support put forward by bankers. There are redundancies to be made across the civil service and the terms are excessively generous. A 50-year-old middle-ranking administrator in any department can expect up to three times their salary and a pension for life under the old arrangements. That puts the price of his or her redundancy into the million-pound bracket.

The cost of a pension at 65 is around £100,000 for every £3,500 of retirement income. Add another 15 years of early retirement and a worker on £30,000 who is eligible for a pension of £20,000 can expect almost to double the cost of retirement from £550,000 to £1m.

Nobody in the private sector enjoys redundancy and pension terms this generous, at least no ordinary worker. Although Serwotka claims workers on low incomes will lose out, only workers on more than £30,000 will see redundancy terms cut from a maximum three years' salary to two. Sure, early retirement is over, but that's the case in most jobs now.

Serwotka, then, needs to make an even wider point than the one he makes about bankers. It is the same unspoken reason for Greek public servants taking to the streets. Without doubt, it is the running sore of the last 30 years that has recently swollen to resemble a boil. It is the gross inequality across society that rewards not only bankers but also a large minority of the property-owning classes who have secured for themselves a disproportionate amount of wealth, much of it in the form of IOUs that must be honoured by future generations, whether with reference to property prices, pension values or services like long-term care. They include MPs, most company directors and, bizarrely, trade union leaders, among the baby-boomer generation who have paid themselves generously, bought assets in the boom and awarded themselves guaranteed pensions.

Civil servants had guaranteed jobs and pensions. Having given up the former, they are loath to surrender the latter to a group, however ill-defined, that still hang on to their generous pay, homes and sundry benefits.

Unless trade unions tackle the wider inequality, they will continue to lose the argument and strikes will be merely symbolic. Until now, they have represented the narrow interests of their mainly older membership. Even Serwotka argues it is the new entrants to the civil service who should bear the brunt of cuts, while his existing members are protected. Such sectional representation wins elections (as Serwotka has recently done inside the PCS), but fails future members and society as a whole.

]]> http://www.businessgaze.com/unions-defend-too-narrow-interests-phillip-inman/feed 0 http://www.businessgaze.com/the-bankers-moral-hazard-paul-myners http://www.businessgaze.com/the-bankers-moral-hazard-paul-myners#comments Mon, 08 Mar 2010 23:30:00 +0000 Paul Myners http://www.guardian.co.uk/commentisfree/2010/mar/08/bankers-moral-hazard-discipline-punish

Our goal is to restore discipline, and make sure financial markets punish as easily as they reward

In August 2007 a shock to global credit markets sparked the most severe financial crisis in a century. A crisis that saw world trade contract for the first time since the second world war and 200 million people around the world lose their jobs. The response from governments meant many millions of jobs have been protected – in the UK the number of repossessions and insolvencies is much lower than feared a year ago – but it has come at a heavy price and with significant controversy. With a difficult period of public spending consolidation ahead and relatively subdued economic and job growth, there has been anger as banks have rebounded from the crisis by paying huge bonuses, several posting record profits. There has been a widely held view that the crisis had negative consequences for everyone except those who caused it.

The failures have not been failures of the market economy. They have been failures of men and women who forgot that market discipline meant that they had to be disciplined in order to get results out of the market place. Too many people got complacent and lazy – and the market responded as we should have predicted, by extracting great costs from a great number of people. Some deserved it, but many did not.

An unswerving confidence in the efficiency of markets became an excuse for many to simply rest on their laurels. Making money is about hard work. It is about taking risks and just as importantly owning up to the fact that you are truly taking risks. And that means being smart, sceptical, and thinking through things before you do them. But for the market fundamentalists making money was about following formulas, plugging in the numbers, sitting back, and waiting for exactly what you predicted to happen, to happen.

The crisis of the last two years should be one unholy reality check for the fundamentalists. The market did not fail. People failed. Like an overconfident swimmer caught in a rip tide, they disrespected the power of the market and were pulled out to sea. But the financial industry did not get pulled out on its own. It dragged with it the savings of our families; the jobs of our workers; the viability of millions of small businesses. And faced then with unprecedented, sweeping, and irreparable damage to the real economy, governments around the world had no choice but to send out the most expensive flotilla of lifeboats ever assembled.

Saving the world's financial system was unquestionably the right thing to do. But in the process of saving it, we protected those very market fundamentalists whose actions caused the crisis.

The risk is now that their confidence has not been sufficiently dented; that they have not truly learned their lesson. And the danger with this moral hazard is that they could put us all at risk again.

This is why a central part of restoring true market discipline to the world financial system must be major reform globally to the way banks and financial firms are governed and regulated.

Our reforms must have three goals. First, we must make the system safer and stronger. We will introduce much more stringent capital and liquidity requirements in a co-ordinated global process. It's vital we do this in convoy – the UK cannot unilaterally adopt significantly more demanding standards than competitor countries. Incentives for bank staff must be aligned with the long-term health of their institutions.

Our second goal is to make the system fairer for everyday consumers with mortgages, pensions, savings and current accounts. Many are still faced with impenetrable language in mortgage and pension provisions. We have already proposed much greater transparency, mandatory income verification before the issuing of mortgages, and a full suite of reforms to make financial products work in the interest of their buyers.

The third aspect is perhaps the most important. It is the goal of this government to make sure financial markets can punish just as easily as they reward. A lot of people lost money in the financial sector over the last few years – bank shareholders in particular. But many have been protected. Creditors have been bailed out. Far too many bankers themselves have enjoyed massive awards during the crisis, even as their firms were rescued.

If we do not address this issue, we will have no hope in restoring true market discipline – the fundamentalists will get right back to business. We are serious about removing the safety net that has allowed those with blind faith in market efficiency to ignore the consequences of their lack of discipline. We are working with G20 countries and the IMF to assess the feasibility of an international levy on financial institutions. Any residual insurance banks are perceived to enjoy will not come for free.

In the past the implicit support of the financial industry has probably represented the most expensive public subsidy provided to any industry in any part of the British economy – vastly exceeding that paid to agriculture or the defence industry. There is no reason why taxpayers should continue to provide a free-at-the-source-of-delivery subsidy to the cost of capital for the banking system. We need to do everything we can to shrink the subsidy to zero.

Finally, it is also important to recognise what regulation can not do. The job of government is to protect ordinary people from the poor decisions of people working in the financial sector, and their failures to manage risk. But it is not to protect lazy or reckless investors and financiers from their own stupidity.

If we are going to fully overcome the anaesthetising effect of efficient market theories, the women and men who have money in the market are going to have to start behaving as if they have something to lose. It is time for real discipline from investors, from owners, and from anyone who has something to lose in the marketplace. And we should do everything we can to make sure failures of market discipline get the scrutiny and condemnation they deserve.