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THE GUARDIAN |
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THE GUARDIAN |
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COMMENT |
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When democracy lost its grip on the City of London The Big Bang fuelled gross inequality, epitomised possessive individualism and cemented a cultural and housing apartheid
Martin Kettle Here's the debate that we ought to have. In the space of a short lifetime this country has become unrecognisable. Granted, the changes have by no means been wholly negative. But they have come at the price of some cherished common values. We all know how much has altered, even if sometimes we are in denial about it. The rest of the world has noticed it too. We have always been open, welcoming and adaptable to the world and should continue to be so. But a way of life has been allowed to develop here, right in our midst, over the last two decades in particular, that challenges our cohesiveness as a society. The transformation has been particularly profound in our capital city, but the effects have rippled across the land. It is time we saw it for what it is. Time indeed to tear aside the veil. I speak, of course, of what has happened in the 20 years since the City of London's Big Bang, an event of colossal and still unfolding financial, cultural and political consequences about which most of Britain's political class nevertheless has strikingly little to say - especially anything that is in any way questioning or controversial - and of which the anniversary falls next week. Like many revolutionary moments, the Big Bang was both dramatic in itself - the sweeping away of the London Stock Exchange's restrictive practices - and representative of a much wider and in some respects necessary and inevitable change of which it was part. The shift of British capitalism's centre of gravity from making things to making money neither began nor ended on October 27 1986. Nor did the City's rapid internationalisation, the cross-sectoral mergers, the changing emphasis on what makes a good company from investment to shareholder value, or the acceleration of executive pay and bonuses. But the Big Bang embodied all these things and more, some of which lasted, like the inflation of the UK housing market, and others of which did not, like yuppies. Nor was the Big Bang the central event in the political transformation of Britain under Margaret Thatcher. It was not as electorally resonant or as carefully plotted an achievement as the sale of council houses, the shift from direct to indirect taxation, the privatisation of the major utilities or the humbling of the trade unions. The Big Bang had very little to do with rolling back the state either. If anything, Thatcher herself had a grocer's daughter's gut hostility to the super-rich yet traditionalist male-dominated world of the City. Even in its own terms the Big Bang detonated something akin to a Year Zero effect among Britain's biggest businesses. Of the 100 leading listed companies in the FTSE100 at the time of the Big Bang, a mere 31 remain there today. The others have merged, collapsed or simply been out-gunned by newer and increasingly international companies. As PartyGaming is now discovering, the process continues as remorselessly as ever today. It is a turnover rate that leaves other major exchanges standing. The financial press is full of stories about how the once dominant New York exchange is now battling to emulate the buccaneering success of London. New York is doing so for one reason alone - because the sums of money traded in London have risen so stupendously and at such dizzying speed. When the FTSE100 was launched in 1984, just before the Big Bang, the total value of all the companies listed on it was £92bn. Today, HSBC alone is valued at £116bn, never mind the other 99. Inescapably the Big Bang has had its profoundest local impact in London itself. Look at the skyline east of St Paul's. Some of these effects are good for middle-class Londoners more generally, like the transformation of the capital's restaurants. Others bring entertainment to all, like the Abramovich-bankrolled revolution at Chelsea. But the impact on the housing market has been brutal for the poor and is increasingly unmanageable for the young. In a report from the centre-right think tank Policy Exchange this week - significantly entitled What Future For Maggie's Children? - the shadow cabinet's David Willetts admits that home ownership has become an ever harder aspiration to fulfil. The Big Bang came to embody the loadsamoney possessive individualism that evolved around it in Thatcher's Britain. And, although the City suffered an early shock to the system in the 1987 crash, and although life in the City has become less dramatic, it still embodies it today, 20 years on. The big difference now is that the divide has become so uncontroversially institutionalised entirely on the City's terms. What Anthony Sampson described as long ago as 1982 as "like an offshore island in the heart of the nation" has today become the engine of what the City's historian David Kynaston calls "a widening discrepancy between the workers' republic in the square mile and the rest of the island". Executive earnings are by no means the only yardstick by which the City's cultural apartheid from most of the rest of British society can be measured, but they are almost certainly the most dramatic. Just this week, Incomes Data Services produced figures showing that the average company boss's pay rose by 43% last year, with the chief executives of the UK's 100 largest listed companies earning an average of £2.9m. The typical boss now earns 86 times more than the typical employee. And even these stratospheric earnings barely keep pace with those to be harvested at the top of specialist investment firms. There's no way in which any of this is remotely proportionate to the world in which the rest of us live. The City of London is surrounded by millions of people who know it is morally wrong, who would probably favour a maximum wage as well as a minimum one, and who think that the rich should pay more tax to provide better services for the rest. But the simple truth is that they know there's nothing they or anyone else can foreseeably do about any of it. Yes, there is an alternative. But not enough people want it badly enough or have any idea how to achieve it. This week Gordon Brown and David Cameron launched rival bids to court the City. There are important differences between their approaches. But the big relationship between politicians and the City is more profoundly unequal today than for decades. The Big Bang marked the moment when democracy let slip whatever grip it may once have had. It was the end of a great dream. Important to talk about it - but best to let it go.
Guardian Unlimited © Guardian Newspapers Limited 2006 |
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