These salaries, and the symbols of excess that went with them, were naturally contentious at a time when unemployment was still rising (it finally peaked during the summer of 1986) and leaving
one in ten of the workforce unable to earn a living. However, those who assumed such striking wealth inequality was the conscious design – as distinct from the by-product – of
Thatcherism might have been surprised by the reaction of the woman herself. Despite the company she kept, the prime minister had never entirely rid herself of her small-business, Methodist roots
and the influence of a domineering father who regarded the Stock Exchange contemptuously as a form of gambling. In this, her
Poujadiste
EN39
instincts stood in unreconciled
conflict with her intellectual commitment to removing restrictions to free trade and facilitating entry to markets at whatever cost to
equality of income. ‘Top salaries in the City fair make one gasp, they are so large,’ she exhaled in 1985, adding the following year: ‘On salaries in the City, I am the first to
say this does cause me great concern. I understand the resentment.’
62
But unless she was prepared to countenance higher-rate tax at a level
that would act as an incomes cap, all she could offer were ineffectual words of restraint. Far harsher language was hurled at her Chancellor when, in the course of his 1988 budget speech, he
announced a further series of tax-cutting measures. Lawson’s statement that he was reducing the basic income tax rate from 27 to 25 per cent was shouted down by the Scottish Nationalist
leader, Alex Salmond, who yelled: ‘The Budget is an obscenity! The Chancellor cannot do this!’
63
Refusing to shut up, Salmond was
expelled from the chamber for five days. Moments later, Lawson’s announcement that the upper rate of income tax was to be cut from 60 per cent to 40 per cent attracted such a barrage of
sustained abuse from Labour MPs that the chamber had to be cleared for ten minutes while tempers cooled.
64
Thereafter, the attacks continued in
the newspapers, with the
Guardian
’s celebrated columnist Hugo Young declaring that such tax reductions represented ‘the final disappearance of the last vestiges of the post-war
consensus . . . Fairness and social justice, as registered through the tax system, have ceased even to be the pretended aspiration of the Conservative Party.’
65
If this was the criterion by which the Tories were to be judged, then Thatcher was on the social justice wing of her party – according to her Chancellor, she thought a
50 per cent top income tax rate a more practical proposition.
66
Lawson, of course, did not accept his opponents’ definition of fairness. As far as he was concerned, lowering high and potentially punitive levels of taxation was an economic stimulant
which rewarded success as part of a virtuous circle that generated more wealth and jobs and thereby increased rather than diminished total tax receipts to the Treasury. Among those it most
affected, at the upper end of the market, it certainly facilitated labour mobility. As Jack Spall, who worked in the City from 1947 to 1986, put it: ‘Because of the high taxation rate [before
1979] it wasn’t really worthwhile anybody moving from one company to another – if you got £10,000 per year more, you got £1,700 out of it and there wasn’t much point
in destroying your life for £1,700.’ But as the top income tax rate fell first from 83 per cent to 60 per cent and then to 40 per cent, the marginal advantage of shifting jobs or even
careers became more compelling, albeit ‘employers became less loyal to their employees because they were paying vast sums of money and if they didn’t perform they were
out’.
67
Accompanying and facilitating this mobility were the ‘executive search’ or ‘headhunting’ companies, a previously niche industry that was now
coming
to be regarded as a critical ancillary to corporate performance. As high-end City incomes soared, so other professional and management salaries rose too, in recognition that more would have to be
offered to retain or attract talent that would otherwise be lured to the Square Mile. The rewards of this approach fell overwhelmingly at the very top and became an enduring feature of the next
three decades, regardless of which political party was in power. In 1980, directors of FTSE-listed companies were typically paid ten times more than their average employee. By the end of the
eighties, they were receiving seventeen times more. By 2008, the difference had risen to seventy-five times. The improving remuneration of those running the previously nationalized utilities
attracted particular attention. For instance, the salary of British Gas’s chief executive, which had been £50,000 when the company was privatized in 1986, stood at £370,000 five
years later – an increase that could not be explained by the company’s basting of its competitors in the intervening period, since it remained a monopoly provider. By 1994, the chief
executive was earning £475,000, as much in a year as Sir Denis Rooke had done in almost fourteen years in the post between 1976 and 1989, during which time he had overseen British Gas’s
growth and steered it through privatization.
68
Sir Denis had to make do with the consolation of the Order of Merit.
Increasingly competitive levels of top-rate tax ensured that individuals who were in demand could use their tradability to maximum personal gain. Deindustrialization facilitated the process,
because while physical plant usually comprised a major part of a traditional industrial company’s asset base, the worth of many of the fast-developing service sector companies was primarily
measured by its human capital. Of no eighties success story was this more true than Saatchi & Saatchi, whose share price halved in 1995 not because of a recent run of indifferent advertising
campaigns but because Maurice Saatchi and several directors left the company, taking with them their personal input and contacts. Drawing its revenue entirely from the power of its ideas,
advertising necessarily provided an extreme example, but it was nevertheless illustrative of one of the eighties’ most marked economic developments. This was the widening of the UK’s
terms of trade, whereby mass low-value products were made more cheaply abroad and imported rather than manufactured in Britain, while national marginal advantage was sought instead by providing and
exporting premium-value goods and services, which tended to be dependent on individual flair, insight and ability. Only through hyperactive redistributive intervention by the state could this
process result in anything other than widening income inequality between those with the requisite skills to prosper in this market and those who lacked them.
The paradox of Conservative fiscal policy towards the rich was that by
taking a smaller share of their income, a larger proportion of the total tax take was raised from
them. In 1979, 11 per cent of total income tax receipts came from the richest 1 per cent of the population. Yet as the top rate of income tax came down from 83 per cent to 60 per cent and then to
40 per cent, where it remained until 2010, the proportion of total income tax receipts paid by the richest 1 per cent steadily grew, not just during the eighties but over the two successive
decades. By 1999, the policy of removing disincentives for the rich to get richer ensured that the top 1 per cent of them were paying 21 per cent of total income tax receipts, and by 2009 that 1
per cent was contributing almost one quarter of total receipts (and the top 10 per cent were contributing 54 per cent).
69
The paradox was easily
explained: punitive rates of tax acted as income caps, making it scarcely worthwhile to be paid salaries within that bracket, with the consequence that relatively insignificant tax receipts were
harvested. Concomitantly, the 83 per cent tax rate created a perverse incentive for those who did earn within that bracket either to use inventive accountancy methods to shift their income offshore
where it was beyond the Inland Revenue’s grasp, or to emigrate – a self-imposed exile familiarly referred to in the seventies as the ‘brain drain’. Significantly, by the end
of the eighties that term ceased to be much cited in public debate, not least because falling top-rate tax made the UK a more desirable place for the rich – and those with aspirations to
become rich – to remain. It was less easy to measure the knock-on economic worth of attracting or retaining them (and their spare investment capital) than to compute the growing proportion of
income tax receipts they contributed. Neither factor, however, impressed critics opposed on principle to a philosophy that maintained ‘we are intensely relaxed about people getting filthy
rich so long as they pay their taxes’.
70
That that statement was made by neither of the two Tory architects of this approach, Sir Geoffrey
Howe and Nigel Lawson, but in 1998 by Peter Mandelson, demonstrated the extent to which the Blair and Brown governments calculated that vast inequality of wealth was not the negation of the welfare
state but rather the only means by which it could still be paid for without a vast tax hike for a far wider section of the electorate. To that extent it was social democracy that ended up pinning
its survival upon the mantra of Gordon Gekko, the anti-hero of the 1987 film
Wall Street
, that ‘greed, for lack of a better word, is good.’
Loaded, Landed, Leveraged
The equivalent of a
Debrett’s
for the new plutocracy was launched as the
Sunday Times Rich List
in 1989. The surprise was perhaps that nothing comparable had
been published until that point, the fate of the one previous
serious attempt having proved instructive. In 1982, the
Sunday Telegraph
began the task of producing a
ranking of the country’s wealthiest individuals, in response to a suggestion from Tiny Rowland, the chairman of the Lonrho conglomerate, that Britain lacked anything comparable to
Forbes
’s wealth rankings in the United States. Days into the research, the project was abandoned when the
Telegraph
’s proprietor, Lord Hartwell, was told bluntly by the
Duke of Atholl that an offer to go grouse-shooting on his estate would be rescinded if an estimate of the Duke’s wealth appeared in the list. Nor was outrage at the vulgarity of a social
ranking determined by money rather than by class of peerage the only concern. The Sainsbury family was so perturbed by the
Telegraph
’s investigative insolence that it contacted
Scotland Yard.
71
Even by 1989, not everyone regarded it as a mark of distinction to appear in the first
Sunday Times Rich List
. The steel magnate Jack Walker condemned it as ‘a beggars’ and
burglars’ charter’.
72
But the
Sunday Times
was edited by Andrew Neil, a self-proclaimed meritocrat who had little regard for
traditional deference and was not to be deflected by the threat of social
froideur
. Necessarily based upon estimates, the survey it produced was far from definitive, but contained much that
was revelatory, particularly when subsequent editions permitted comparisons to be made concerning the changing nature of wealth and those who possessed it. In 1989, inherited wealth still
predominated, accounting for 57 per cent of the top two hundred entries. Landowners accounted for one quarter, with eleven dukes, six marquesses and fourteen earls among them. A decade later, the
nouveau riche
had broken through, with self-made millionaires accounting for more than three quarters of entries. Even allowing for some intervening inflation, the scale of the fortunes also
underwent a transformation. In 1989, the estimated £80 million owned by ex-Beatle Paul McCartney made him the country’s eighty-third richest person. By 2008, those with £80
million were on the cusp of being excluded from the top one thousand. Another change was the internationalization of British-domiciled wealth. In 1989, only 11 per cent of those listed were born
abroad. Twenty years later the proportion was nearing half of them.
73
Vast wealth usually takes time to fructify, so it was understandable that those who began amassing personal fortunes in the eighties were not recognized among the echelons of established
multi-millionaires until the following decade. What was striking during the eighties was how clearly demarcated the lines remained – at least in the popular perception – between those
who had inherited money and those who were self-made. Indeed, the eighties brought into common parlance two terms that appeared perfectly to describe two identifiable, and rival, lifestyles
associated with affluence and aspiration. These were the ‘Sloane Ranger’ and the ‘yuppie’. The etymology of both terms was revelatory.
A wordplay on the Lone Ranger, the term ‘Sloane Ranger’ was actually coined by
Harpers & Queen
back in 1975, when the upmarket magazine’s
features editor, Ann Barr, commissioned Peter York to write about ex-public schoolgirls inhabiting flats in Chelsea close to Sloane Square who conformed to the type (it was only later that the term
was applied to men as well). By 1976, the first classified advertisements were appearing in
The Times
seeking a Sloane Ranger to cook for private dinner parties on the Fulham
Road.
74
The wider public remained oblivious to the meaning of this in-joke until 1982, when Barr and York edited
The Official Sloane Ranger
Handbook
. In it they described a social group – ‘movement’ was the sort of sociological term they would have despised – that was self-consciously disconnected from
modern egalitarian or even meritocratic assumptions, preferring to see worth in the supposed values of ‘old money’ and class distinction (supposedly tempered by
noblesse oblige
),
and whose modes of speech and manners had not obviously moved on from the ‘U and non-U’ usages popularized by Nancy Mitford in the 1950s. That snobbery – or at any rate poshness
– of this kind still existed was not of itself news.
The Official Sloane Ranger Handbook
’s achievement was to market the age-old notion as somehow trendsetting.