Whatever the rights and wrongs of Thatcher’s legacy, we need someone equal to her convictions, writes Alf Young
AMID the welter of words written and spoken about the death of Margaret Thatcher, beneath the avalanche of analysis of her impact and legacy, other significant events have passed by with scant scrutiny. Yet, some of them bear directly on the kind of world she was instrumental in shaping.
In the days before Thatcher died, SSE, one of the fruits of her passion for privatising state industries, took out full-page adverts, apologising for the way it had sold energy on doorsteps in recent years. “Sorry isn’t good enough” was the headline confession from a group whose core is the old Scottish Hydro-Electric board.
What would Tom Johnston, the Hydro’s visionary post-war chairman, make of such humiliation? Is the £10.5 million fine levied on SSE by its regulator, Ofgem, good enough? Especially when set against its billion-pound-plus profits every year – or even when measured against the reported £15m in share options, pension entitlement and other incentives the accountant who has run the group since 2002 will leave with in July.
Ian Marchant, who turned 52 in February, isn’t going because of the mis-selling scandal. He is handing over to his deputy because, he says, “the time is right” for both him and SSE. He and his fellow executives forfeited some bonus last year because of the way customers were misled. But in a world where many of them struggle to pay ever-rising energy bills, let alone gain access to a decent occupational pension, that £9m pension pot Marchant has accumulated will certainly ensure a plush retirement for him
The day after Baroness Thatcher died, the man who ran the banking conglomerate HBOS before it crashed in 2008, requiring a £20 billion state bail-out, announced he is giving up 30 per cent of his pension. Savagely criticised by a parliamentary commission as the main architect of the disaster, Sir James Crosby has also volunteered to be stripped of his knighthood.
We should applaud the 57-year-old Crosby’s belated mea culpa. But even with that 30 per cent cut, his bank pension will still be paying him more than £400,000 a year. Not bad for just 12 years service, first at Halifax, then at HBOS. Even better for leading a team that, in less than a decade, reduced the 300-year-old Bank of Scotland and the 150-year-old Halifax Building Society, the UK’s largest, to little more than brand names for Lloyds Banking Group, itself still languishing, like Royal Bank of Scotland, on taxpayer-funded life support.
That wasn’t supposed to be in the script when Margaret Thatcher, at the height of her powers, set about freeing up markets and rolling back the state. Whether it was selling British Gas to Sid in 1986, deregulating financial services with Big Bang that same year, or selling off electricity generation and supply from 1990 onwards, her thrust was clear. The aim was to make the whole United Kingdom stronger and more prosperous again through liberated self-interest.
Whether selling off council housing at deep discounts, promoting wider share ownership through the various privatisation issues or slashing the top rate of income tax from 83 to 40 per cent in the 1988 Budget, the objective was always the same: national salvation through rampant material individualism, fostered by the dream of dynamic free markets supplying almost all our needs in every corner of these islands.
And where has this vision left us? Our business elites – from banking to utilities – have, in the main, profited mightily. Marchant may have had to send a mouthpiece on to the BBC Radio 4 Today programme to say sorry. James Crosby may soon be plain Mister again. But, in the main, our captains of commerce have enjoyed salary inflation on a grand scale, bonuses and share options galore and deep-pile pensions, all garnished with a liberal sprinkling of knighthoods and peerages.
Meanwhile, Sid’s original windfall is long gone. If he dabbled in our now-zombie banks, he’s nursing hefty losses there. His house may still be worth a lot more than he paid for it, but neither his son nor his daughter, both now into their 30s, can get that first step into home ownership. And, thanks to an acute shortage of social housing, the rents they have to pay in the private sector – like their utility bills – just keep on rising.
Sid may have enjoyed a better-paid, higher-skilled job, even a decent occupational pension, when UK industry made more of what we all consume. But over the past three decades, as much of the UK’s manufacturing base has withered away, younger generations, many already burdened with student debt, are more dependent on less well-paid service industries for work, if they can find it.
Some on the right have tried to argue that the credit binge and the financial collapse that followed owes nothing to Thatcher’s legacy and is solely the handiwork of Gordon Brown. But that, as Martin Wolf of the Financial Times told a reader of one of his columns the other day, is the refuge of either the “ideologically blinded or a fool”. The real lineage is unmistakable.
In material terms, the Thatcher revolution, from its emphasis on owning your own bricks and mortar, through deregulated financial markets and privatised utilities, to her encouragement of atomised self-interest, rather than any sense of community as the driving force in maintaining social cohesion, shaped the two decades since her political demise. As Wolf also argues, the credit boom and the banking bust would still have happened, had the Bank of England still been regulating banks or the Tories won again in 1997.
After her ousting, politicians of all stripes continued, on the whole, to dance to her tune. They were all, as Lord Mandelson once tellingly put it “intensely relaxed” about some people getting “filthy rich”. Brown cosied up to Crosby. Just as Alex Salmond cosies up to Marchant. Suspended from the Commons during the 1988 Budget for challenging Nigel Lawson’s cuts in the top rate of income tax, our First Minister now boasts a Monaco-based tax refugee as a member of his council of economic advisers.
Just as the state, under Brown and Alistair Darling, socialised the eye-watering liabilities of our increasingly reckless banks, our welfare system has progressively underwritten the cost of the endemically low pay on offer to post-Thatcher generations across great swathes of our services-dominated economy. New Labour’s minimum wage put some kind of floor under that. But now, as the coalition’s welfare reforms continue, that floor is rotting away. Especially, as a new austerity audit commissioned by the FT has shown, across the UK’s poorer communities.
Faced with the grotesquely unequal society we already are, and the even more unequal society we are destined to become on current plans, what is to be done? There are radical ideas out there. We could replace the minimum wage with a living wage, set across the public and private sectors at a level that allows recipients to do just that: live.
It has its advocates on the right as well as the left. Not just because it would begin to address today’s yawning inequalities, but also because it represents a better way of picking a stagnant economy up off its knees and reviving demand. But where, now that Thatcher is gone, is the political leader with the courage and conviction to embrace such a challenge?