A £37,000 pay cut

Well, Mr Hester, Chief Executive of RBS, is not to get his £1m bonus after all: it has been cut to £963,000. For most of us a cut of £37,000 would be pretty serious. Indeed for most of us £37,000 is considerably more than we actually earn. But for Mr Hester it is a flea-bite.

Mr Hester is said to be a very effective Chief Executive, and that may will be so: I have no means of judging. However, some of the "turn round" of RBS has been achieved by cutting thousands of jobs. If RBS was overstaffed and employees were just filling in their time by passing memos to each other, as per Parkinson's Law, well and good. But if they were doing useful work and their absence places an unacceptable burden on those who remain, or more functions requiring personal contact or expertise are passed to impersonal automated systems, that is unacceptable.

Given that the average wage is around £26,000 that £963,000 could have preserved the jobs of 37 RBS employees on average pay. Some enterprising journalist could pick out 37 RBS workers who have lost their jobs to pay Mr Hester's bonus and chart their experiences over the next few years as they try to find alternative work in a system where there are five unemployed people for every vacancy. Then we can compare their collective experience with whatever pleasure Mr Hester gets form his extra £963,000.

We also need to remember that the £963,000 is on top of Mr Hester's "normal" annual pay of £1.2 million - equivalent to the "compensation" of a further 46 employees on average wages. So altogether the Chief Executive, effectively a public servant, is paid 83 times more than the average employee in his, or rather our, organisation.

Most of us accept the need to pay differentials to reward different levels of ability and responsibility, but this ratio has gone well beyond what is necessary, fair or just, or even sustainable in a cohesive society which claims that we are " all in this together." Plato thought a ratio of 4:1 would be ample, but he probably didn't include the salves. My own view is that multiples of up to ten times the minimum wage would be sufficient to incentives and justly reward all sorts and conditions of men and women.

A Mixed Bag from Clegg

It was heartening at the beginning of the week to read headlines coupling "Bishops and Liberal Democrat Peers" in their alliance to block the benefits cap. Happy to see the party back on the side of,if not exactly the angels, at least their representatives on earth, as well as back on the side of rationality. Unfortunately this welcome sanity and consequent publicity, surely likely to make the party more attractive to all engaged professionally in the area, was spoiled by Clegg's appearing at least once on both radio and television, to say that he was in favour of a benefits cap.

It seems obvious to me that welfare payments should be based on need. Somebody somewhere has worked out what is the minimum necessary to provide one or a group of individuals a basic safety net. I suspect this provision will not be generous. To place an artificial cap on it, so that a group receives less than this basic minimum, is nonsensical and inconstant with either fairness or the standards of a civilised society.

If there is a "rip off" in this area I suspect it is not by families in difficulties but by landlords who charge exorbitant rents. The government would be on stronger ethical ground by tackling abuse in this area rather than pushing the most vulnerable in our society even further below the poverty line.

There is something rather sick about a government which bullies with such enthusiasm the weakest in society and yet seems content with ineffectual noises when it comes to tackling the excesses of the rich. One glaring example: the Chief Executive of RBS receives a salary of £1.2m and there is talk of giving him a bonus of a further £million - both sums beyond the wildest dreams of most of the rest of us. Since RBS is 83% publicly owned its Chief Executive is virtually a public servant and paid with taxpayer's money. Easy for the government to stop this abuse, but somehow there's another law when it comes to facing up to the those at the top rather then the bottom of the pile.

However, on the brighter side, Nick Clegg is expected today to call for an acceleration of rate at which the lowest earners are taken out of paying income tax. Whilst not helping the very poorest, those not in employment, this will provide some relief for the hard-pressed and, by stimulating demand, may through the Keynesian multiplier do something to promote growth and therefore employment.

Guardian Pushmepullyou

The Guardian faces both ways on the approval of the plan for a high speed rail link from London to Birmingham, with eventual extensions to Manchester and Leeds. A leading article, "Big ticket transport" (11/01/12 - the "link" thing is not behaving itself) gives reasonably enthusiastic support, whilst their columnist Simon Jenkins describes it as "A triumph for all rail nerds (and) money beyond all sense" (also 11/01/12). I find myself comfortably on the side of Jenkins and, for the first time in my life the self-styled Taxpayers' Alliance, who I believe have described the scheme as a "rich man's train set."

As a dedicated Keynesian I am of course delighted that the government is planning to spend £33bn on the development of the infrastructure, but suspect there are many more projects on which the money could be spent which would be both more environmentally friendly and of more use to the majority of the population. I suspect that the government has plumbed for HS2 as a pathetic attempt to keep up with the continental Joneses. But France, for example, has over twice the land area of the UK so it is very useful to have high-speed trains for getting from one end of the country to the other without leaving the ground. By contrast, 40 minutes off the journey time from London to Birmingham is unlikely either to facilitate an economic miracle or improve the quality and convenience of most of our lives.

If and when HS2 is completed I suspect its fares will be so astronomical that only businessmen on expenses will use it, and those of us who search the web for cheaper options will still be travelling along the existing network. (Which, for long journeys, is highly satisfactory. In my college days in London in the 1950s the journey time from Leeds was about five hours: now it is just over two, and very comfortable, apart from the incessant announcements from the staff, even in the so-called quiet coach.)

I am not a transport expert but I suspect that £33bn spent on electrifying the remaining parts of the long-distance network, upgrading the ramshackle cross-country and urban commuter services, providing every major city with a tram system, allocating a dedicated coach lane on the motorways and upgrading the broad canal systems to take more freight would be of far more value to the economy and to the quality of life of the majority of us.

Simon Jenkins claims that the government has caved in to a lobby "led by contractors and consultants who (have) manoeuvred themselves into what has become almost an arm of government." I hope a groundswell of opposition, not just from those on the route who are worried about their back yards, but from ordinary people throughout the country who are missing out on the alternatives ,will force a change of heart.