When The Spirit Level was published 15 years ago in the latter days of Gordon Brown’s premiership, its analysis of the corrosive social impact of inequality turned it into an instant bestseller. Since then, as they noted in the Guardian last month, the authors Kate Pickett and Richard Wilkinson have been invited to give more than 1,000 presentations of their groundbreaking research, which has now been updated in a new report.
The book’s core observation remains the same: by reinforcing “the idea that some people are worth much more than others”, extreme inequality damages the social fabric and gives the lie to political rhetoric about “all being in this together”. But as the latest analysis of CEO pay by the High Pay Centre confirms, such considerations continue to be treated with blithe indifference at the very top of business. According to the thinktank’s report, pay for the leaders of the UK’s 100 biggest listed companies now stands at the highest level on record. The average chief executive in 2023 benefited from more than 100 times the pay of the average full-time worker in Britain. AstraZeneca’s CEO, Pascal Soriot, was the highest-paid, receiving £16.85m, compared with £15.3m in 2022. This year, Mr Soriot, who has undoubtedly done a good job, is on course to receive £18.7m – 1,000 times the minimum wage.
“For whomsoever hath, to him shall be given, and he shall have more abundance,” as Matthew 13:12 has it. But this gospel observation was in relation to knowledge of the kingdom of heaven, rather than salaries and long-term share bonuses. In the City of London, insecurity about the post-Brexit future is being leveraged to promote a more material focus on mammon.
The soaring wealth of Mr Soriot and others has been justified by reference to the going rate for bosses in the United States, although academics in the field have failed to locate evidence that such stratospheric pay is necessary to retain executive talent. Banks are meanwhile removing post-crash obstacles to greater self-enrichment among employees. Following the scrapping of an EU-imposed bonus cap by Kwasi Kwarteng during his 38 days as chancellor, Barclays announced last week that staff would be allowed to receive up to 10 times their salaries in payouts. Rivals are preparing to follow suit.
Disappointingly, the new Labour government has chosen not to reverse Mr Kwarteng’s act of largesse. But as Mr Wilkinson and Ms Pickett suggest, the bigger picture of a country in which the gap between the rich and the poor has gone back to 1930s levels needs urgently to be addressed. The same market logic that is deployed to justify absurd remuneration at the top has been used to impose austerity on lower earners. People notice such things and the unfairness fuels alienation, destroys political trust and undermines the sense of a common good in which all are invested.
The chancellor, Rachel Reeves, has refused to rule out raising inheritance tax or capital gains tax in her autumn budget, presenting the need to raise revenues as an economic necessity following years of Tory misrule. But achieving a more equitable distribution of rewards is also an ethical imperative. The High Pay Centre recommends giving workforce representatives a say in the setting of top executive pay. Anything that helped rein in the current excesses would be a move in the right direction.
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