Daily Mail, Monday, August 19, 2019 Page 65
(^)
W
HY is my child voting
for Jeremy Corbyn?
And what does it mean
for my investments?
These are questions
vexing many a middle-aged fund
manager in the City.
They are mystified that their young
adult offspring are acolytes of the
Labour leader and can’t see the Cor-
bynist socialist brew as the recipe for
ruin it most certainly would be, if he
ever gained power.
Of course, the young have always been
more inclined towards radicalism than their
staid and conventional elders. It’s part of
the job description, after all.
Alarmingly, though, investment group
Waverton, formerly JO Hambro, has found
a penchant for Corbyn continuing deep into
middle age.
The point at which you are more likely to
vote Conservative than Labour, it claims,
has risen from 34 to 51.
Student finances is one reason the young,
and their middle-aged mums and dads are
angry. In 1980, students were given a £3,000
grant to help fund university – equal to
£12,600 today. But the current crop of
undergraduates have to take on thousands
of pounds worth of loans and pay tuition
fees instead.
Perhaps the most significant underlying
reason for political disaffection is that the
very, very long trend for real earnings to
keep improving has stalled.
Waverton looked at how well British work-
ers have been paid, dating back to 1209.
Those that survived the Black Death in the
14th century saw wages rise because of a
shortage of labour, but for a long period
from the 15th to the 19th century they were
in the doldrums.
During the Industrial Revolution, earnings
well and truly took off. The long steeply
upward trend since the early 19th century
has led many to expect rising standards of
living as a birthright, and to believe that their
children can, with hard work and luck, be
more prosperous than they are themselves.
But since the financial crisis, the long
upward march has come to an end and
earnings have barely risen at all.
T
HIS, along with house prices that
mean home ownership remains
out of reach for longer to many
young people, explains why there
is so much disaffection despite high levels
of employment.
In the US, the wages of unskilled workers
peaked more than 40 years ago in 1978,
which no doubt explains some of the appeal
President Trump has in the Rust Belt.
It’s not surprising that unconventional
economic ideas are surfacing, such as Mod-
ern Monetary Theory, championed by US
Congresswoman Alexandria Ocasio-Cortez.
MMT is a doctrine saying that govern-
ments that control their own currency can
spend as much as they like because they
can just create money to pay off their debts.
Political fears stalk markets
City Editor: Alex Brummer http://www.thisismoney.co.uk Business Editor: Ruth Sunderland
City Finance
Ruth
Sunderland
BUSINESS EDITOR
£5million
fees paid to Neil Woodford’s
company by investors in his flagship
fund since it was shuttered in June
Conventional economists think it’s bonk-
ers. But in a post-crisis world where quanti-
tative easing – basically central banks print-
ing money – and near zero interest rates are
seen as normal, it’s not surprising that the
voter in the street can’t see the difference.
Trump’s trade war with China and the
prospect of a No Deal Brexit, which has hit
sterling, are having an effect on markets.
There is capital flight from Argentina
because investors are afraid populists
Alberto Fernandez and former president
Cristina Kirchner might return to power.
In Hong Kong, unrest has spread into the
corporate world as protesters plan synchro-
nised cash withdrawals to try to create a
run on the banks. The British boss of Cathay
Pacific airline resigned on Friday after pres-
sure from China to clamp down on staff who
were supporting protests.
In Italy, the banking system is shot to
pieces and the ruling populist coalition is
falling apart. The long reign of Angela Mer-
kel in Germany is drawing to a close with
the country on the brink of recession.
Markets in the UK and US have been
pretty sanguine so far, though last week
there was a stomach-churning downward
lurch before equilibrium was restored. It is
a taste of things to come.
by Tom Witherow and James Burton
Footsie bosses battle
outrage over pensions
Break-up fears
for Doncasters
ONE of Britain’s oldest firms could
be broken up and sold off piecemeal
- leaving its 3,200 workers facing an
uncertain future.
Engineering company Doncas-
ters, which dates back to 1778,
reportedly faces a dramatic split to
prevent its collapse. The firm has
been floundering under £600m of
debt, which could bring it down
without drastic action.
Doncasters’ lenders – which
include New York hedge fund Bri-
gade Capital as well as private
equity firms CVC and Carlyle – are
said to have effectively taken con-
trol from its current owner, sover-
eign wealth fund Dubai Interna-
tional Capital.
The firm faces being split up into
as many as eight parts to pay off its
loans, The Sunday Telegraph
reported. Founded in Sheffield dur-
ing the early days of the steel indus-
try, it has 3,200 staff in locations
across England and Wales and in its
international divisions.
BTG chief nets
£18m payout
THE chief executive of former
stock market darling BTG has
pocketed £18m from its sale to a
US pharmaceuticals titan.
Dame Louise Makin was handed
the payout after overseeing seri-
ous illness specialist BTG’s £3.3bn
acquisition by Boston Scientific.
Makin, 58, ran BTG for 14 years as
a listed company. The Boston take-
over valued shares at 840p each –
37pc more than their value on the
stock market at the time.
She picked up the money as her
bonus schemes paid out when the
deal completed.
BTG was set up in 1948 as the
state-owned National Research
Development Corporation to help
private companies make money
from publicly funded research.
It was privatised in 1992 and now
focuses on interventional medicine
for diseases such as liver cancer.Companies aim
to beat backlash
after string of
investor revolts
last year paid their bosses pen-
sion contributions that are at
least a quarter of the size of their
vast base salaries.
Trade body the Investment
Association says that executives
on new contracts should not
receive more than 15pc of their
salary in pension contributions,
and existing bosses should get
less than 25pc.
Ordinary staff – who of course
earn far less anyway – typically
get much lower contributions,
normally no higher than 15pc.
Among the worst offenders is
Lloyds, which gave chief execu-
tive Antonio Horta-Osorio (pic-
tured with wife Ana) a pension
payment of £573,000 last year –equal to 46pc of his base salary,
when most ordinary workers at
the bank get no more than 13pc.
Lloyds is cutting 55-year-old
Horta-Osorio’s payments to 33pc,
or £419,000, this year but increas-
ing other elements of his pay.
The change was not enough to
prevent a scathing attack from
MPs on the Commons pensions
select committee, who hauled
directors before Parliament in
June, although it did head off a
revolt over pay at the bank’s
annual meeting.
Another bank roundly criticised
was Standard Chartered, which
suffered a rebellion by almost 40pc
of shareholders at the lender’sannual meeting over the £460,000
pension bonanza for chief execu-
tive Bill Winters, 57. He then him-
self got in hot water when he
branded investors ‘immature’ for
the outcry over the payment –
which was equal to 40pc of his sal-
ary – and was forced to apologise.
The bank is now looking at ways
to diffuse the row, and it is widely
thought Winters’ pension could
be cut.
Other companies that offer par-
ticularly generous pension pots
include Dublin-based building
materials firm CRH, where 57-
year-old boss Albert Manifold
was given a £625,000 pension
equal to 46pc of his salary,prompting a 15.5pc vote against
his pay. Meanwhile, textbook
publisher Relx handed 56-year-
old chief executive Erik Engstrom
£545,000, or 45pc, of his salary.
Most bosses receive the money
as cash, whereas ordinary work-
ers cannot access their workplace
pension until retirement.
Andrew Ninian, of the Invest-
ment Association, said: ‘Investors
have been clear that they expect
companies to pay executives the
same pension contributions as
paid to the majority of the work-
force. It is simply not fair that
executives enjoy pension perks
that far exceed those of the rest
of their employees.’BRITAIN’S biggest firms are scram-
bling to contain a backlash over
bosses’ lavish pension perks after a
string of investor rebellions.
Blue chip companies in the FTSE 100
have come under unprecedented attack
this year for paying bosses far more
generous contributions towards their
retirement than are available to ordi-
nary staff.
A host of companies have already taken
action to cut back on bosses’ payouts,
with more expected to follow suit.
In total, 47 businesses in the FootsieAlbert Manifold
£625,000 46pc
Erik Engstrom
£545,000 45pc
Geoff Drabble
£325,000 40pc
Bill Winters
£460,000 40pc
Antonio
Horta-Osorio £573,000 46pcChief executive PensionPercentage
of salaryFIVE OF THE WORST OFFENDERS