Bad managers on brilliant pay: that’s why the UK’s not working
B anker bonuses are on the rise again. NatWest, HSBC, Lloyds and Barclays have in the past fortnight reported shelling out millions of pounds to bosses and assorted directors as a reward for their exceptional efforts. Almost £20m was doled out between the four chief executives.
A glance at the FTSE 100 shows that all chief executives seem to believe they are exceptional: the data shows their pay and bonus packages averaging a whopping £3.4m each, or 103 times the £33,000 average salary for full-time UK workers.
One might ask what makes them worth such enormous sums when Britain’s productivity, judged by output per worker, is 20% to 30% lower than most other industrialised economies. Could it be perhaps that, in the main, they are not very good managers, and that their financial rewards are related to other factors, often beyond their control?
Banks, for instance, have seen profits soar as a result of higher interest rates, which have allowed them to earn fatter returns by boosting charges to borrowers by more than the returns they offer savers.
They might cast themselves as the backbone of the economy, allocating loans to drive investment, but between 80% and 90% of their lending is against residential property. And although many of us will invest in our homes, upgrading the country’s housing stock in the process, that is not how the UK will pay its way in the world.
Meanwhile bosses of energy giants such as Shell and BP play a game of “heads we win, tails you lose” as their pay climbs from year to year, blind to the ups and downs of global energy prices.
Next week, MPs on the business, energy and industrial strategy committee will question industry leaders in parliament about “opportunities for growth and innovation, and how
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