Quango - Snout on the Future

One unusually sunny day in September 2000, somewhere in a field in Hampshire, a pig began to turn blue. The pig's name was Cedric, and he was experiencing difficulty breathing. This was on account of having tried to eat an entire loaf of bread in one go. It got stuck in his throat, and now, 120 kilos of living pig were rapidly on their way to becoming 120 kilos of pork. Cedric put up a fight. He stomped, wheezed and grunted, but the bastard bread just wouldn't come loose. He toppled over. And died. In his final moments, as he rushed down the tunnel of light towards the celestial abattoir, it's not known whether Cedric The Pig looked back upon a montage of his own life's highlights. But if so, it seems likely they would've climaxed with him unseating the chairman of British Gas just five years earlier. In 1995, Cedric The Pig had been lead around to various shareholder meetings of British Gas by trade union officials unhappy that company chairman Cedric Brown had awarded himself a 75 percent pay rise that year. His party trick was to eat £5 notes dipped in treacle, and he became, for a few days at least, a national cause celebre that helped galvanise the image of snouts in the trough – one that ultimately did for Cedric Brown, who resigned a few months later. Poor Cedric The Human has conspicuously failed to choke on anything in the intervening 16 years. He is still alive, a spry 76, but as he looks at today's boardroom pay awards, he must be on the brink of choking on his own bile. The £475k he took out of British Gas in the year he nearly doubled his salary looks like chump change compared to what the self-professed cream award themselves these days. Barclays' Bob Diamond's on 47mil, the drinks brand Diaego's boss Paul Walsh is on 3.1mil, Ian Chesire from B&Q 'trousered', as they say, 4.2mil. Somehow, between 2000 and now, the executive class slipped the bonds of earth, and stopped getting paid in multiples comprehensible to us mortals. Once they got over the million mark, the mere aura of being connected to that much money forced people to treat them as demigods who were, circularly, completely worth it. Despite all the hand-wringing from politicians, the recession has barely scraped its trajectory – what's still unironically termed 'compensation' is up 45 percent just this year. Which is why senior execs must be shitting Faberge eggs now that Nick Clegg has decided that something must be done. Not content with attempting to solve a 90-year-old problem like House Of Lords reform – one that has so far baffled generations of political geniuses like Asquith and Lloyd George – the crash test dummy of British politics is flinging himself straight at another brick wall by trying to tie down exactly how much money is 'enough' for execs. From Andy Marr's cuddly Sunday morning purple couch, he made the usual right noises: no more pay for failure, put workers on the remuneration committee, rewards should be correlated with success, plus a dose of the coalition's usual panacea: when in doubt, hit it with 'more transparency'. Unfortunately, Clegg's basic assumptions have already stuck him on the wrong road. By saying that rewards should be correlated with success, he implicitly buys into the great lie of the age: that the success of a company is down chiefly to its CEO. A company can quite easily have made a product which the CEO has had no hand in that has become a runaway bestseller. The previous CEO might've done a bold bit of investing which has only just come to fruition years later. Or the company might just be in the middle of a massive stock market bubble (see: the last ten years). Besides: most don't stick around long enough to do more than give the rudder a few thrusts in the right direction anyway. Within the same sentence, Clegg managed to walk into another big fallacy: the idea that executives need 'incentivising'. That, should he fail to get his 47 milllion quid a year, Bob Diamond is going to sit sulking in his jewel-encrusted swivel-chair, playing solitaire on his iPad and sneaking out for fag breaks all day, like that disgruntled teen at ASDA who never seems to give a shit what aisle the clothes pegs are in. According to most observers, the real reason for the high pay these days is nothing to do with 'iincentives' or the massive outbreak of corporate success we're living through; it's the mini industry that has sprung up of 'pay consultants'. They come striding out of companies like Towers Watson, an HR monolith so fartingly full of management-speak that their website proudly boasts: “By connecting the big picture and your picture, we help you achieve real-world results.” They come and they stride and they advise the board on what everyone else is being paid, then mash all the buttons on their calculators together until they come up with a formula that somehow represents a package that will get this schlob working hard all day instead of looking up clips of cats riding skateboards on YouTube. The effect of pay consultants was meant to be to clearly establish a market rate: in reality, seeing as no CEO wants to have his pride pitchforked by being paid 'below average', the effect has been to create a huge inflationary ratchet. Ironically, it seems that Nick's bold plans for further transparency will only lead to more of this sort of thing. None of which seems to have occurred to the deputy Prime Minister, as Andrew Marr gave him the 'stern but attentive' face and sucked in his cheeks a little more. “Just as we've been quite tough on unsustainable, unaffordable things in the public sector, we now need to get tough on irresponsible and unjustifiable behaviour of top remuneration of executives in the private sector,” he waffled amiably on.This is what it what it sounds like, Nick, when pigs fly.

Previously: Quango - A Common European Destiny