Home | The Socialist 24 Aug - 6 Sept 2006 | Join the Socialist Party

Cream for fat cats - debts for us!

TOP EXECUTIVES' pay is still soaring. Chief executives from the 100 biggest UK-based firms received average pay rises of 10% last year, more than twice as high as increases across industry.

But pay's only half the story. Some fat cats in Britain's boardrooms and City of London dealing rooms have had bonus payments totalling a record £19 billion this year - roughly the same as Britain's entire annual transport budget.

Bosses' bonus payments increased by £2.5 billion (16%) this year. Following a £1.5 billion rise last year, they have leapt by a quarter in two years. Over half were paid to top-flight people in 'financial services' in the City of London and Canary Wharf.

The biggest bonuses, often many millions of pounds, go to a few investment bankers or financiers for attracting more business for their boss or tying up large merger deals. Many City banks got record profits through rising share prices and a boom in mergers and acquisitions.

Britain's banks together made a record £33 billion of profits in 2005. First half figures suggest they may beat that in 2006 despite the growing numbers of personal insolvencies and bad debts. Other companies paying huge bonuses include oil companies such as BP and Shell who have profited from the tripling of oil prices.

This echoes the enormous class divide in all capitalist economies where profits, dividends and massive bonuses accumulate at the top.

Meanwhile, workers' 'average' earnings went up by 4.3%. And a recent survey showed that most people spend an enormous proportion of their income on essential living costs such as utility bills, mortgages, rents, food and travel expenses and on servicing debts such as credit cards.

Cardiff was Britain's most expensive city to live in. 97% of residents' earnings - £1,059 out of £1,088 - were committed to outgoings. £160 a month went on credit cards and other debts. Londoners paid out £1,338 on average although their 'average' income was higher.

Many people must be falling further into debt with each pay cheque. The effect of that on Britain's economy could eventually be enormous.

Unite against war, terror and racism