The British government is under attack for being too soft on the "super-rich." A new book by the BBC's Robert Peston describes the excesses of private equity and City bonuses. But can these be reined in without damaging a vital industry?by Jonathan Ford / March 28, 2008 / Leave a comment
When the governor of the Bank of England warns of hard times, it’s time to sit up and take notice. In the bluntest of warnings to the British middle classes, Mervyn King has pointed out that higher energy and food costs are causing “a genuine reduction in our standard of living.” In simple terms, we are getting poorer.
This will not come as a surprise to many people. Newspapers are crammed with penny-pinching tips and cries from middle-class professionals about how hard it’s getting out there. House prices have been falling faster than at any time since 1990-92, although February is seeing an anaemic recovery.
We are not the only ones who are noticing. In the third quarter of 2007, just 38,680 Poles signed up to the government’s register of migrant workers, a year-on-year decline of 18 per cent. Officials say that Poles leaving Britain outnumber those coming in. Canny workers that they are, they apparently don’t like the look of our economy.
In this situation, it is inevitable that people should reach around for someone to blame. And, surprise surprise, opprobrium has been heaped on the government. So there couldn’t be a better moment for Robert Peston’s new book, with its demagogic, anxiety-inducing title: Who Runs Britain? How the Super Rich are Changing our Lives (Hodder & Stoughton).
Peston’s thesis is that globalisation has created a new class of super-rich who have made fortunes on a Victorian scale. Some are industrialists, others are retailers, but many work in the City of London. Almost all of us have done well in the past 15 years or so, but Peston fears that this fortunate few, or their descendants, will end up wielding excessive power. They may not run Britain now, but they have “the means through the funding of political parties, the funding of think tanks and the ownership of the media to shape government policies or to deter reform of a status quo that suits them.”
Worse, these people are a threat to social cohesion. The growth of the super-rich as a class has corroded “the fabric that holds together communities and the nation.” Peston believes that their reluctance to pay more than the minimum amount of tax undermines the social contract, while the dizzying accumulation of wealth makes the average Briton feel that in the “casino” economy, luck—and connections—matter more than skill and effort. The rich “behave as…