The reward for failure

We read Northern Rock's former boss Adam Applegarth received a £750,000 pay-off when he left last December. Applegarth, who is 46, is also entitled to draw on a pension pot of £2.5m at the age of 55 . Experts say that could bring him retirement benefits of up to £200,000 a year.

As we all have read Northern Rock collapsed and bad management was a factor in this bank's demise . So is this a capitalism's reward for failure ?

Many of us facing attacks on our final salary pension schemes will also be wondering why we have to work longer for less while the rich can dip into a retirement pot of gold .

Council Leaders Fat Cats

The number of "fat cat" council bosses being paid more than £100,000 a year has risen by 25%, new figures show.

A town hall "rich list" revealed that 818 local authority bosses now earn more than £100,000. In 2005-06 it was 645.

The average pay package for those on the list was more than £120,000 - nearly five times the starting wage of a police constable. Fourteen earned more than the prime minister's £188,000 annual salary, while six received more than £200,000 from the public purse.

Despite Gordon Brown's demand for an inflation-guarding 2% cap on public sector wage settlements, top council bosses enjoyed an average rise of 4.6% - more than double that of last year.

"Too often, council executives are rewarded handsomely even when they fail," said the chief executive of the pressure group TaxPayers' Alliance .

The top 10 best-paid council officials, 2006-07
1. Northamptonshire: Peter Gould, chief executive, £215,000
2. City of Kingston-upon-Hull: Kim Ryley, chief executive, £213,162
3. Kensington and Chelsea: Derek Myers, town clerk and chief executive, £205,000
4. Northampton: Mairi Mclean, chief executive, £205,000
5. Bexley: Nick Johnson, chief executive, £203,000
6. Hertfordshire: Caroline Tapster, chief executive, £201,485
7. Ealing: Darra Singh, chief executive, £195,456
8. Surrey: Dr Richard Shaw, chief executive, £195,330
9. Cambridgeshire: Ian Stewart, chief executive, £195,000
10. Westminster: Peter Rogers, chief executive, £195,000

HOME OF THE BRAVE

"The homeless population of New Orleans since Hurricane Katrina has reached unprecedented levels for a U.S. city: one in 25 residents. An estimated 12,000 homeless accounts for 4% of New Orleans' estimated population of 302,000, according to the homeless advocacy group UNITY of Greater New Orleans. The number is nearly double the pre-Katrina homeless count, the group says." (USA Today, 16 March) RD

Credit Crunch - Not for everyone , it seems

Bob Diamond, the US banker who runs Barclays' investment banking arm, has cemented his position as one of the highest paid bosses in a FTSE 100 company after receiving almost £36m last year. The figure comprises £21m in cash, bonuses and shares in addition to £14.8m from a three-year performance plan. The £21m includes his £250,000 base salary, £6.5m cash bonus, a £11.3m share award held in a trust for three years and £3m of shares which will be received in three years provided performance criteria are achieved. His total is boosted by the £14.8m "retained incentive opportunity" - half in cash, half in shares - put in place three years ago when he joined the Barclays board.

Diamond achieved the bonus even though Barclays took a £1.6bn hit from the sub-prime crisis in the US and despite ongoing financial woes which have seen billions wiped off share values worldwide. The bank's profits in 2007 were £7bn, the same as 2006, and its share price has suffered.

The report published yesterday also exposed the pay to bankers working on takeovers. Barclays paid one former director £600,000 a month during the bank's ill-fated bid for Dutch rival ABN Amro. Naguib Kheraj received the sum, plus £14,178 a month in benefits, from May to December 2007 for a "corporate finance advisory role". The £4.9m he received was in addition to the £657,000 he was paid to the end of April while he helped his successor settle in.

Asylum Britain

A report, published by the Independent Asylum Commission which has been the most comprehensive examination of the UK's asylum system ever conducted , with testimonies from every sphere of society, including three former home secretaries, more than 100 NGOs, 90 asylum-seekers, the police, local authorities, and hundreds of citizens, has found it "marred by inhumanity" and "not yet fit for purpose". The commission found that Britain's treatment of asylum-seekers "falls seriously below the standards to be expected of a humane and civilised society". The report details how the "adversarial" system is failing applicants from the very first point of interview, with officials accused of stacking the odds against genuine claimants. "A 'culture of disbelief' persists among decision-makers," it said. "Along with lack of access to legal advice for applicants this is leading to perverse and unjust decisions." "Some of those seeking sanctuary, particularly women, children and torture survivors, have additional vulnerabilities that are not being appropriately addressed," it found.

The use of detention centres – especially to lock up children, pregnant women and torture victims – was condemned, as was the often brutal handling of removals, and the use of destitution as a tool to drive claimants out of the country.

GOT IT? FLAUNT IT

"In a shipyard in Germany, Blohm & Voss workers are building a mammoth yacht called the Eclipse. Like many things in the secretive world of super yachts, its exact length is hard to pin down. So is the name of its owner, and the cost of building it. But according to the Web site of The Yacht Report, one of several publications that track yachting with the same intensity that gossip magazines cover Hollywood hunks, the Eclipse is 531.5 feet long. That’s six and a half feet longer than the Dubai, an 11,600-ton behemoth that now holds the record as the world’s largest yacht. Its owner is the ruler of Dubai, Sheik Mohammed bin Rashid al-Maktoum. The extra length on the Eclipse isn’t an accident. Supersized yachts are the latest examples of one-upmanship among billionaires, many of whom already own a private jet, a Rolls-Royce or two, and multiple mansions. Despite fear of an economic recession and unrelenting job pressures among those who remain yachtless, there’s still a lot of money floating around the world. And as the superrich get richer, the size of yachts grows bigger and bigger, too. (New York Times, 16 March) RD

On the Fiddle

Capitalism is a strange type of money society . We read throughout the 1920s stock market crash, the Second World War and the oil crises of the 1970s, there was one stock which remained steady – fine violins. As global financial uncertainty strikes again, investors shy of the FTSE and put off by property may wish to consider putting their money into a Stradivarius instead.

This is the hope of the Fine Violins Fund, a syndicate set up by the renowned violin restorer and trader Florian Leonhard, which is hoping to attract investment for about 50 pre-19th century Italian violins. The project aims to loan the instruments to up-and- coming performers – old violins are worth more when they are in use, and being linked to the career of a musical star can also increase their value. The cellist Julian Lloyd Webber, the historian and philosopher Theodore Zeldin and the principal of the Royal Academy of Music, Professor Sir Curtis Price, all sit on the advisory board of the investment vehicle, the first fund investing in fine violins, with a target of €60m (£46m) in commitments. The fund has already attracted pledged investment of €25m and hopes to be running by the early summer. The violin fund can achieve a net return of from 12 to 15 per cent.

What about wine investment ?

In recent years there have been several vintage wine harvests, making it a good time for investors. The Wine Investment Fund, set up by Peter Lunzer, holds and sells for maximum returns, based on the principle that certain fine wines in limited supply increase in quick, short bursts over time.

Or perhps stamps ?

Leading dealer Stanley Gibbons offers an investment service, based on its 150 years experience of philately. Salomon Brothers rated stamps among the top four investments of the 20th century, giving an average annual return of 10 per cent. Autographs and rare coins also offer investment opportunities.

Maybe cars ?

Cars are not usually a good investment but vintage cars can make money, particularly if they are rare and have low mileage.

But , of course , in the end , the real source of wealth is always the workers labour and the surplus value they produce .

A caring society ??

THE number of Scottish children in care is at its highest in two decades and youngsters are being pushed on to the streets at just 16, leaving them vulnerable to addiction, violence and homelessness a new report from Scotland's Commissioner for Children and Young People .

The report highlights the gulf between children brought up with their families – who are increasingly staying at home until well into their twenties – and those who are in care.Although Scottish Government policy dictates that children should leave at 18, six times as many are leaving at 16, often coerced by social services.The report found that children with "challenging behaviour" are those under most pressure to leave. More than one in 10 reported episodes of homelessness. Some were sent to bed-and-breakfasts - at least one youngster had to share accommodation with a convicted murderer. Senior social work sources said 16-year-olds were being squeezed out to make way for an army of needy children

Author of the report ,Ms Marshall, said: "In many cases children and young people in care are seen as a troublesome burden rather than a vulnerable person to be nurtured. At 16 - the time they need help to cope - many are all but completely abandoned with little, if any aftercare."

The report states that the level of 15- to 18-year-olds who are homeless "represents a shocking failure in corporate parenting".It claims authorities are either failing to keep under-18s within the care system, or not supporting them afterwards in accordance with the legal duty that extends to the age of 19. Although the laws and the policy in place supported the children and prioritised their interests, there was a gulf between that and practice.

Tam Baillie, the assistant director of Policy and Influencing at Barnardo's Scotland, said: "Nowadays, most young people stay at home well into their twenties, yet most looked-after young people leave care aged 16 or 17. We need to ask ourselves why our most vulnerable young people are expected to be fully independent at such a young age, often in very difficult circumstances..."

Elsewhere , we read more than a quarter of drug addicts due to receive treatment have been waiting for more than a year .

work causes cancer

Further to this earlier post that health inequalities between rich and poor have widened since Labour came to office in 1997 , American research shows that night-shift workers, and their number is growing by about 3% per year, according to the Bureau of Labor Statistics , are known to be at higher risk for accidents, sleep disorders and psychological stress due to daytime demands, such as family and other obligations, that interfere with sleeping. Now scientific evidence suggests their disrupted circadian rhythms may also cause a kind of biological revolt, raising their likelihood of obesity, cancer, reproductive health problems, mental illness and gastrointestinal disorders.

The evidence for an increased cancer risk is so compelling that, in December, the International Agency for Research on Cancer, a unit of the World Health Organization, declared that shift work is "probably carcinogenic to humans."

*Night-shift workers have a 40% to 50% increased risk of heart disease compared with day workers, various studies have found.
* People who get five hours of sleep, common among night-shift workers, are 50% more likely to be obese than normal sleepers, Columbia University researchers have found. Several dozen other studies have tied sleep loss to weight gain as well.
* Women night-shift workers have higher rates of miscarriage, pre-term birth and low birth-weight babies.
* Night-shift workers show increased rates of breast (by 50%) and colon (by 35%) cancer in numerous, independent studies. And animal studies have shown that exposure to dim light during the night-time can substantially increase tumor development.

ANOTHER SNOUT IN THE TROUGH

"Patricia Hewitt is to join BT later this month as a non-executive director, boosting her salary by a healthy £60,000.The appointment of the former Secretary of State for both Trade and Health into one of Britain's largest private companies muddies the water between politics and business." (The Register, 13 March) RD

FOOD FOR THOUGHT

"Five years after the United States invaded Iraq, plenty of people believe that the war was waged chiefly to secure U.S. petroleum supplies and to make Iraq safe -- and lucrative -- for the U.S. oil industry. We may not know the real motivations behind the Iraq war for years, but it remains difficult to distill oil from all the possibilities. (Washington Post, 16 March) RD

GOOD NEWS FOR SOME

"The housing crisis and credit crunch may end the American dream of property ownership for millions of people, but for landlords seeking bargain investment properties the market is looking up. ...Building contractor Chad Blankenbaker seeks foreclosed homes to "flip" -- buying at well below market value, refitting then selling them at a hefty profit. "I'm shocked at how low the prices are here," he said. "There's so much inventory that no one has to fight to buy anything. "Around the country the housing crisis represents both a business opportunity for landlords and a huge shift in the rental market." (Yahoo News, 17 March) RD

The big gamblers

Despite the turmoil in the markets, bank failures and write-offs amounting to £60.5 billion City bonuses will top £6 billion this year.

Dozens of bankers at Goldman Sachs, for example, were awarded bonuses of at least £5m each at Christmas, with one lucky trader pocketing more than £10m in cash and shares. The average bonus at Goldman Sachs last year, one of the more extravagant payers, was £300,000. Staff are thought to be dreading the possibility that the average this year will be a mere £200,000 – And , of course , that is all on top of salaries and other emoluments.
Professor Stigliz said "Even if they lose their jobs, they walk away with large sums..."

Professor Stiglitz, a former chairman of the President's Council of Economic Advisers, under Bill Clinton explained ."...When things turned out well, they walked away with huge bonuses. When things turn out badly – as now – they do not share in the losses...The system was designed to encourage risk taking – but it encouraged excessive risk taking. In effect, it paid them to gamble...It is one thing to gamble with one's own money – but these bankers were gambling with other people's money – and with the government backstopping any losses. This is unconscionable."

NO CREDIT CRUNCH HERE

"Gulfstream Aerospace on Thursday unveiled plans to build the largest, fastest and most expensive private jet for delivery starting in 2012. Gulfstream said its new G650 will be capable of flying nearly 700 mph, faster than a Boeing 747. It will seat 18, have a full kitchen and bar, and offer individualized entertainment, satellite phone service and wireless Internet access during the flight. Passengers will be able to sip a cocktail at 51,000 feet, its maximum altitude, the company says. "The G650 is in a brand new market by itself," said Gulfstream President Joe Lombardo. At a base price of $58 million, it will cost about $10 million more than its predecessor, Gulfstream's G550. With a flying range of more than 8,000 miles, it will be capable of whisking heads of state, CEOs and other VIPs from New York to Tokyo or Buenos Aires non-stop. (USA Today, 13 March) RD

THE POOR DIE YOUNGER

"Health inequalities between rich and poor have widened since Labour came to office in 1997. A report published yesterday shows that attempts to narrow the gaps have largely failed. In infant mortality and life expectancy, two important measures, the gap is wider now than it was then. David Sinclair, head of policy at Help the Aged, said that the figures made a mockery of the Government's attempts to tackle rising inequality and represented a staggering failure. “The starkest demonstration of the gap between rich and poor can be seen in the gulf in life expectancy between different social groups. Despite the Government's commitment that no-one should be disadvantaged by where they live, the reality is that people who are poor, or who live in poor communities die earlier” he said. (Times, 14 March) RD

MPs REDUNDANCY BENEFITS

Teresa Hunter in an article in Scotland on Sunday makes some interesting points on how the redundancy payments could be eroded for some workers,
In a previous article here in the Socialist Courier, the advantages of being an MP were, you decide what MPs need and vote it through parliament, this part of the article shows further advantages over the rest of us.
Is this money taxed?
"The first £30,000 of a redundancy payout is free from tax and National Insurance, provided it is genuinely compensation for redundancy. Above this amount, payments are added to your earnings for that year and taxed at your highest marginal rate. To qualify for £30,000 tax exemption you must be made redundant. Gardening leave, for example, is not redundancy, and neither is three months' salary in lieu of notice.PricewaterhouseCoopers' tax partner Valerie Smart said:
"The (HM Customs &] Revenue can also be very difficult about contractual payments. So, for example, if you have a contract which says you must be paid so much if the employer asks you to leave early, they view this as a contractual payment not redundancy."Even more worrying, the taxman is increasingly scrutinising redundancy payments made to people in their 50s. Smart adds: "If you are made redundant in your 50s and never work again, is that redundancy or pre-retirement? If you don't work again, they are beginning to try to argue that it is a retirement lump sum and should be taxed."The exception to this rule is MPs who enjoy a special privilege, extended in the recent Budget to members of the Greater London Council, and London mayor Ken Livingstone.If MPs lose an election or decide to leave they can apply for a resettlement grant which can pay half of their £61,000 salary if they have been in the house for less than 10 years, rising to 100% over 15 years at certain age groups. MPs enjoy the first £30,000 of their resettlement grant tax-free, even though they would not be entitled to under the rules which apply to the rest of us."

Privatise Profits - Socialise Losses

BANK OF England governor Mervyn King used his now-famous meeting with the chief executives of the "big five" UK banks last Thursday to admonish them for increasing shareholder dividends.

On February 27, HBOS hiked its dividend by 18% to 48.9p meaning the bank offers a yield of 6.9%. It also lowered the targets under which directors would receive payouts on its executive incentive schemes. Previously directors only received bonuses under the scheme should the bank's shares outperform a basket of UK banks by 3%. Under the new rules, HBOS only needs to be 1.5% above rivals to trigger pay-outs.

Colin McLean, chief executive of SVM Asset Management said: "It just seems wrong that bankers are looking for support and essentially public money at a time when both dividends and executive pay are not only high but have also just been raised."

As we previously reported annual reports from RBS and HBOS show that Sir Fred Goodwin's remuneration totalled £4.19 million in 2007. Hornby's package climbed 22.5% to £1.93 million.

Lest we forget - Hung out to Dry

The richest 10 per cent of the UK population increased their share of the nation's marketable wealth (excluding housing) from 57 per cent in 1976 to 71 per cent in 2003.

Over the same period, the speculative capital that could be deployed or invested by the bottom 50 per cent of the British population fell from 12 per cent to just 1 per cent.

The wealthiest 1 per cent of the population, on current government figures, now control more than a third of all the marketable wealth – and this ignores the vast sums held in offshore tax havens.

The New Economics Foundation has shown that global growth has not aided the poor. In the 1980s, for every $100 of world growth, the poorest 20 per cent received $2.20; by 2001, they received only 60 cents. Clearly , growth disproportionately benefits the rich and further impoverishes the poor.

Real wage increases in the top 13 countries of the Organisation for Economic Cooperation and Development have been below the rate of inflation since about 1970 – a situation compounded in Britain as the measure of inflation massively underestimates the real cost of living.

Thus wage earners – rather than asset owners – have faced a 35-year downward pressure on their standard of living. Indeed, the golden age for the salaried worker, as a share of GDP, was between 1945 and 1973 – and not this vaunted age of liberalisation.

From The Independent

spoiled kids or a spoiled world

The media will no doubt concentrate the headlines on over-indulgent parents , the liberal minded permissive mum and dad who won't instill a sense of discipline in their kids but for those of us who seek deeper understanding other parts of the report come to our attention . The problem lay with parents who were struggling with little or no help to bring up their children in a heavily commercialised world.

The report urged the government to tackle the commercialisation of culture head-on.

Research author Maurice Galeton said: "It is particularly acute where people are living in violent neighbourhoods. ..Very young parents in violent and deprived neighbourhoods without the network of support that others get ... have a huge level of stress in their lives."

Schools indeed reflect society in general .

NOT ACCORDING TO PLAN

When the US and UK forces invaded Iraq we were assured that the plan was to improve the lot of the Iraqi population, but like a lot of political promises the reality was to lead to a far different conclusion. "The humanitarian situation in post-war Iraq five years after the US-led invasion is one of the most critical in the world, the International Committee of the Red Cross said in a report late Sunday. Millions in the country had no access to drinking water, sanitation or healthcare. ...Although the situation had improved in some areas, Iraqis were either killed or wounded in daily attacks or violence with civilians often being targeted, said the report. Healthcare was far too expensive for the average citizen, it added. A recent World Health Organisation and Iraqi health ministry report estimated that 151,000 people were killed between the start of the invasion on March 20, 2003 and June 2006. Other estimates have put the number of civilian deaths as a result of the conflict between nearly 48,000 and as high as 601,000." (Yahoo News, 16 March) RD