Wednesday, 9 December 2009

"Class war" on bank bonuses? The myth debunked

Over-excited media commentators and bloggers in the run-up to today's pre-budget report have claimed that Bashing the bankers is all part of Labour's class war , as Benedit Brogan put it, or, less luridly have described this as a 'core vote' strategy in which Labour is abandoning the centre-ground to focus on appealing to its political base.

This is a myth. And here is some evidence which shows why.

The Fabian Society carried out extensive research on public attitudes to fairness for the Joseph Rowntree Foundation over the last year. This has informed the analysis and recommendations in our 'Solidarity Society' book, published by the Fabian Society and Webb Memorial Trust tomorrow.

Both the deliberative workshops and the project polling showed that instincts and beliefs about fairness were most often stronger than people's individual self-interest: that is why the minimum wage is overwhelmingly the most popular thing the Labour government has done since 1997, even though only a minority of voters benefit from it as individuals.

This is reflected in very similar responses from voters across different class backgrounds, as well as from different party political preferences, towards the question of city bonuses.

Public attitudes suggest these are much better described as 'solidarity' measures than class war measures.

* 87% thought ‘Bankers in the City of London are overpaid’.

- That was the view of 86% of C2DE voters and 88% of ABC1 voters; of 86% of those who planned to vote Labour and 87% of those who planned to vote Conservative.

* 56% thought ‘When companies fail executives should have to pay back their bonuses from the last two years’, while 20% disagreed.

- That was the view of 56% of C2DE voters and 56% of ABC1 voters. It was the view of 57% of those planning to vote Labour, and 56% of those planning to vote Conservative.

There was also strong support for greater transparency about how bonuses were awarded; and for the participation of employees on renumeration committees.

This broad support was not just a phenomenon which could be observed when it came to the question of bankers and the bailout.

* 84% thought that ‘The government should act to stop tax avoidance by richer households (when households exploit legal loopholes in order to substantially reduce their tax payments)’ That was supported by ABC1 (85%) and C2DE (84%) voters. There was a slight party political gap, but only between Conservative (82%) and Labour (89%)

* 67% thought that ‘There needs to be an increase in tax rates at the top to ensure that richer households contribute more to public services’ – Again, there was two-thirds support from both ABC1 (65%) and C2DE (68%) voters.

The first two questions were asked in December 2008 and the second two in February 2009, with the polling carried out by YouGov. My point is less the overall level of support on these questions as the apparent lack of any class gap on these questions.

You can't really call it a class war when "we're all in it together", as somebody once said. And this helps to explain why David Cameron and George Osborne will be very much joining Gordon Brown and Alistair Darling on the popular side of any barricades today!


Nor is this simply a phenomenon related to the financial crash, though that did lead to the shift which we observed in an increasingly salient public distinction between the deserving and undeserving rich. (This had, of course, been a strong New Labour theme before 1997 with regard to the privatised utilities).

Our segmentation of public attitudes suggested that this was not because we all share an approach to fairness - when it comes to need, effort, merit and entitlement - but rather because of how different attitudes to fairness coincide on particular issues. This suggests less a 'core vote' as a 'fairness coalitions' approach, as I set out in a Tribune article explaining the four clusters on fairness which account for almost 99% of the electorate.

The “traditional egalitarian” approach, which thinks of fairness primarily in terms of need and so believes strongly in redistributing from the rich to the poor, is a minority position – although it is endorsed by 22 per cent of the electorate.

Equally important, only 20 per cent of the public hold the “traditional free market’” position, which believes that the poor and the rich have got what they deserve. These people are strong supporters of the Thatcherite view that more inequality would be fairer, in terms of rewarding effort, and necessary to promote prosperity.

If fewer than half of us are partisans in the traditional battle between left and right, the two other clusters of opinion will have a decisive impact. Those in the “angry middle”, who make up 26 per cent of the population, believe they are the victim of “free-riding” at both the top and the bottom. They often regard welfare recipients in a punitive, stereotypical way. But what has been overlooked is how angry this Daily Mail demographic is about excess at the top, too.

Thirty-one per cent of the population are “post-ideological liberals”. They have fairly neutral attitudes towards both rich and poor. They can support redistribution on pragmatic grounds. And they respond to evidence of the link between inequality and social problems, such as crime.

This helps to show how action on bank bonuses is supported by over three-quarters of us, for a range of different reasons.

The 'traditional egalitarians' form a good part of the Labour core vote, but they are far from alone on this issue.

The 'angry middle' are particularly aware of this as a problem of 'unfair rules': asking why do some people need a bonus for doing their jobs - "Who else but bankers get a bonus for simply turning up?" is a headline which appears in today's Telegraph - and about 'rewards for failure' and the cheek of trying to take out millions when the financial system was saved by taxpayer support.

"You should live in the same world - and by the same rules - as the rest of us" was an important driver of anger about MPs' expenses; as the Telegraph's Benedict Brogan will be very aware. He doesn't appear to see how the same instinct applies to the banks' approach to bonuses, particularly threats to make human rights appeals.

And the post-ideological pragmatists see the evidence against large bonuses earnt because of taxpayer support; and will also think that taxation at the top is a sensible way to raise money in tight fiscal circumstances, particularly if that means support for priority measures, such as youth unemployment.

Against those range of views, the pro-market core which is outraged at any challenge to bank freedoms or 'bonus culture' will have its work cut out, particularly when its claims about incentives and rewards are substantively challenged from each of the other positions.

Daft arguments about the 'death of New Labour' and abandoning the centre-ground rather raise the question 'whose centre-ground is it anyway?'

This also resolves the puzzle of why on earth the opposition parties would back measures which simply pandered to the Labour base in this way.

If the centre-ground had been vacated, they might seize it. They plan to back Labour's measures because (as was also the case with the new higher rate of taxation) on earnings over £150,000 - they are very much where the centre-ground of public opinion is - across social classes and of majorities across the political spectrum.

A similar approach can also be seen in public attitudes towards the minimum wage and taxation at the bottom, support for carers where there are broad popular majorities for a stronger 'fairness' agenda, much of which would be both popular and right.

Let's see how strongly the Chancellor can develop that theme today - and let's look too for ways in which a popular fairness agenda could and should be developed further in the run-up to the budget and the election manifesto.

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