George Osborne presided over a national productivity disaster when he was Chancellor. But the MP for Tatton is certainly making an outstanding personal contribution to repairing some of the damage now.
Last week the House of Commons Register of Members’ Financial Interests disclosed Osborne’s earnings from outside Parliament since he was sacked from the Cabinet last year. What the record shows is nothing less than a productivity miracle.
In October Osborne spent two hours delivering a speech to an outfit called Palmex Derivatives in the City of London for which he received £80,240. That’s more than £40,000 per hour of his time. Not even Paul Pogba of Manchester United gets that kind of hourly rate.
Earlier in the same month Osborne gave a speech to the Securities Industry and Financial Markets Association in New York for just one and a half hours. He expects to receive £69,992 for his efforts; an hourly rate of £46,000.
Osborne’s full salary when he was a Chancellor was around £120,000 a year. Assuming that he worked 10 hour days and took five weeks holiday a year his pay rate was around £50 an hour. So since leaving office Osborne has multiplied his personal output per hour by more than 900 times. If only the rest of the economy could bottle some of that productivity-enhancing magic. Maybe we should all get sacked from the Cabinet by Theresa May.
But speeches to financial firms are not Osborne’s bread and butter. That will come from four days a month “advising” the colossal US asset manager Blackrock, a job for which he will be paid around £650,000 a year (not including share-based bonuses). Assuming, again, a 10-hour working day, that’s £1,350 an hour, still at least 25 times his previous daily rate as a minister.
When he was shadow Chancellor George Osborne talked tough on the need to reform finance, sensing the mood of outrage in the country in the wake of the collapse of Lehman Brothers and the associated economic carnage. In 2009 he made radical noises about breaking up “too big to fail” banks including Lloyds and the Royal Bank of Scotland, which had been bailed out by the taxpayer at huge public expense.
But that radicalism melted away when he entered 11 Downing Street. He did establish the Independent Commission on Banking headed by Sir John Vickers to look into the case for breaking up the giant banks. But in his 2011 report Vickers failed to recommend a split and instead delivered a halfway house known as “ring-fencing”. The banks still gripe about that hassle of that reform, but this a pedicure compared to the amputation a full split would have represented.
And as the years went by Osborne talked less and less about financial reform and more about the need to unclip the wings of the banks. Avoiding “the stability of the graveyard” became his catchphrase.
The Treasury’s door was constantly open to the industry’s lobbyists and top executives. In one remarkable episode, he personally intervened to stop the US Department of Justice bringing criminal charges against HSBC for laundering the profits of terrorists and drug dealers. One of Osborne’s lucrative speeches in January was to HSBC: £51,328 for two hours of work.
As Chancellor he pushed through regulatory changes with major implications for the savings and pension industry – most of them positive for the bottom lines of those companies. And now Osborne works for the largest asset manager in the world, which plans to pay him almost ten times his MP’s salary while he continues to sit in the House of Commons. We have no reason to believe that Osborne was motivated, while he was in high office, by the possibility of one day earning hundreds of thousands of pounds a year from the financial sector; nor that he took any decision as Chancellor in relation to the industry with anything except the good of the British public uppermost in his mind.
Nevertheless what message does the example of him now being sprayed with cash by giant banks, financial trading companies, asset managers and hedge funds, all within months after leaving office, send? What’s the message that goes out to other politicians ascending the greasy pole?
It sends the message that it would be wise to be attentive towards the interests of the financial industry because, if your political career is terminated prematurely, these companies can – and do -reward former top politicians in ways that would make a Premier League footballer blush.