Peter Hain says two thirds of City bonuses should be redirected to charity, or employers who dish them out should face tax penalties. David Cameron is trying to find a formula to suggest he disapproves of City greed while signalling that the City need fear no tax-grab from him. Those who find the disparity between bankers’ pay and everyone else’s morally repugnant, or at least uncomfortable, often also cast doubt on the ‘trickledown’ theory — that the wider economy benefits efficiently from the lavish spending of the lucky few. Such sceptics should consider the parable of the Chelsea nanny.
A City friend who used to negotiate remuneration deals for bonus-hungry equity salesmen gave me a vivid account of an even more bruising recent negotiation: with the Slovakian girl who looks after his children. He lives in SW10, a district which is not only popular with investment bankers but also feels the warm breeze of rouble wealth from the nearby football club. He reckons local nanny salaries have doubled in three years — to a minimum of £31,500 a year and a top rate of £40,000, plus gym memberships, flights home and keys to the 4×4.
Back in 2003, when financial markets were at a low ebb, nanny demand was also depressed. My friend’s analysis suggests that it is not the FTSE-100 index that provides a leading indicator of nanny pay, but the level of merger and acquisition activity — including the rash of private-equity bids such as the current one for J Sainsbury. Why the correlation? Because bankers who advise on takeover deals are typically posher than share traders, more likely to have been brought up by nannies themselves, and more inclined to hire domestic staff as soon as they can afford to.
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