The New Few by Ferdinand Mount finds a champion of localism in a globalised world

If you like your politics simple and laced with prejudice you will know exactly how to categorise someone like Ferdinand Mount. He is, technically, a baronet; certainly he went to Eton and Christ Church, Oxford, so you would automatically find yourself reaching for that box marked “Establishment”, prepared to give it a big tick. You’d remember that he used to be the head of No 10’s policy unit under Margaret Thatcher, and you would tick it again. If you had read his well-received memoir Cold Cream, you would realise that his relatives – Anthony Powell (uncle), Lord Longford (ditto), David Cameron (cousin’s son) are so eminent or patrician that they could have a whole Who’s Who section all to themselves.

Three ticks, and that’s him sorted. The languid, patrician accent would merely underline the fact just as surely as the effortless charm.

And then you’d read his latest book, The New Few, and realise just how wrong you have got him.

In his 2004 book, Mind the Gap, Mount highlighted the extent to which Britain’s society hadn’t become the bourgeois paradise of Thatcherite dreams but splintered instead into super-rich elite from which the poor were excluded even more than they had ever been by the old barriers of class.

The New Few extends that critique of social inequality even further. Its thesis is essentially that Britain has surreptitiously turned into an oligarchy effectively ruled by super-rich businessmen piratically plundering their shareholders’ funds and by bankers with excessive and all too often taxpayer-funded bonuses. As a result, social mobility has not only stalled but gone into reverse.

That is precisely the same analysis you would expect from a left-wing commentator such as Polly Toynbee – indeed it precisely echoes the one in her book Unjust Rewards, which pointed out that fat cat greed is bankrupting Britain and ripping apart its social cohesiveness. But, along with a damning indictment of the emasculation of local government – for which he is quite prepared to blame Mrs Thatcher – it is hardly the sort of stuff you might expect to hear from a high Tory. What on earth is going on inside the mind of Sir William Robert Ferdinand Mount?

We meet in the echoing, cathedral-like atrium of London’s St Pancras hotel. It is crowded, so I suggest a pint in a nearby pub. No, he says, let’s stay here and have tea. So we do.

He is quietly spoken, good company and charmingly-deprecating. “Sometimes, in a black moment, all I think we did was make it possible to buy reading specs at Boots,” he replies, asked what he felt proudest of having achieved while head of Mrs Thatcher’s No 10 policy unit in 1982-3. Elsewhere, he has described time working for her as “the longest holiday from irony I’ve ever had”.

One theme of The New Few, he says, is the extent to which it proves the law of unintended consequences. “The Big Bang of 1986 was a classic example. In principle, Mrs Thatcher thought it would be a brilliant idea to loosen up the whole financial system. But in practice this produced a more malign, gigantic structure and squeezed out all the variety that there had been before – mutually-owned building societies, small brokers’ firms, all the things that made the system work.

“The poll tax was another, which centralised power and destroyed the local base of revenue. Abolishing the rates, which is something that was wished on her by Ted Heath in almost her first job, was clearly a mistake: it was actually a very fair and reasonable tax.”

Take away the powers of local government, Mount argues, and you take away the reason people get involved in politics in the first place. In 1960, 10 million Britons were members of political parties, the Conservatives with at least 2.25 million, and Labour, thanks to its union affiliates, between two and three times as many. Now, all the major political parties would struggle to put together half a million party members between them.

On both sides of the divide, power was not centralised, so local constituencies could select their own candidates, and generally have more impact on party policy. “These parties are hollow machines still spewing out jobs on quangos but which don’t represent the people. Combine that with the castration of local authorities … obviously I see more Conservatives than Labour, but I am shocked by the numbers of them who are completely cynical about local government.”

There is a philosophical underpinning to both Mount’s attacks on plutocratic greed and call for political decentralisation: the Burkean notion of the “little platoons” that hold society together. It is, he insists, just a matter of simple respect for other people that no-one should pay themselves more than, say, 40 times the average earnings in their company, just as it is a matter of simple economics that bonuses should be only a fraction of directors’ salaries and even then firmly linked to success.

Even this has been enough for some commentators to label Mount a “Tory Marxist”. That has to hurt: Marx, in his view, “was a horrible man fuelled with bitterness and loathing”. It is also unfair: Mount’ s remedy to the shut-down of social mobility isn’t to look to the state but to a reformed market – simple measures such as making sure that directors have to abide by the limits shareholders put on their pay and bonuses.

“These people are so shameless,” he says, “that even if they have a 51 per cent vote against the remuneration report, they still go ahead. But as soon as you make it mandatory, you begin to get a real lever on these things. You also need to readjust the levers of power a bit: for example, for the past ten years we have been told that the director-general of the BBC had to have a massive pay rise. Now [chairman of the BBC Trust] Chris Patten has said no, he will have to have his pay halved.”

Company bosses, Mount points out, always had it within their power to loot their own companies: the wiser ones such as the Dutch East India Company realised the possibility as early as the 17th century and set up safeguards against it . “Yet from the 1930s to the 1970s, in Britain, what was striking was that they didn’t do this. They held back from giving themselves vast rewards by reticence, decency, whatever you like to call it.”

It is interesting to take a historical perspective on excessive boardroom pay. Marx thought that it was this ever-widening gap between the rich and poor that would ultimately undermine capitalism. It didn’t happen. Instead, after 1860, that gap began to narrow. From the 1920s to the 1950s, it shrank still further – so much so that, as Mount points out, in the 1950s the boss of the US chemical giant Dupont pointed out that he was taking home in pay half of what his father had in the 1920s. In the middle of the 20th century, economists such as Simon Kuznets (a future Nobel laureate) were even pointing out that while the initial stages of industrialisation added to income inequalities, its advance stages would lead to greater social equality. That didn’t happen either, but the fact remains all the same that by the 1970s social mobility in Britain was at its highest ever.

“Britain has always been a more open society than most,” says Mount, “and it became a lot more open from 1930 to 1970. It’s not that it has closed entirely, but there is a lot less optimism about the possibilities on the bottom of society. And there’s nothing much to increase the sense of community in the economic sphere.”

We talk more about what that means, about riots (“if you let areas go downhill, this is what you get”), the 50p tax rate (“an irrelevance”), and his cousin’s son’s ideas of the Big Society (“a clumsy expression, but basically the idea is sound”). Finally, he tells me about the next book he is writing.

It will be, he says, about his distant relatives in the India of the Raj, where one of them was the resident of Lucknow. “He had his children there 20 or 30 years before the Indian Mutiny, and was forever writing to his bosses in Calcutta warning them that if they carried on stationing regiments there and redistributing landowners’ land, they would antagonise the Indians to the point at which they would rebel.”

So again, it is about localism? “Yes. It’s about listening to what people are saying and how you shouldn’t think you know best. It’s the purest possible localism and respect – about respecting people as they are, not as you might want them to be.”

His ancestor’s advice was ignored, the Indian Mutiny broke out and his children waded through blood to reoccupy their childhood house. Mount’s elegantly written, thought-provoking – and I think entirely persuasive – warnings about the consequences of excessive boardroom pay and lack of social mobility might not have such dire consequences. But would you really want to bet on it?

• The New Few by Ferdinand Mount is published by Simon & Schuster, price £18.99. He will be talking about it at the Edinburgh book festival at 2pm today.