The cossacks should do the trick. No decent party these days is complete
without a cossack, so there will be six, decked out in traditional costume
and mounted on black stallions, ready to greet the guests.
Inside the splendour of London’s Guildhall more cossacks will entertain the
throng along with Katherine Jenkins, the classical singer, and Darcey
Bussell, the ballet dancer.
Jemima will be going, Hugh probably not. David Tang, the entrepreneur and
socialite, has a table. Bryan Ferry is on the list. And the hedge-fund boys
will be out in force like some City gang of dealers, money their drug.
This will be the “Diner des Tsars”, a sumptuous banquet that will take place
in London next month: tickets are £1,500 a pop before you even think about
the Louis Roederer Cristal champagne at £1,200 a jeroboam.
“It’s very over the top and fabulous, spectacular and lavish,” gushes one of
the organisers. “The dress is imperial elegance and that really encapsulates
the whole evening.”
In the Great Hall guests will tuck into an eight-course banquet prepared by
the Michelin-starred chef Tom Aikens. Caviar with avocado purée, lobster and
artichoke salad, poached turbot with langoustine sauce and chervil gnocchi
and many more delicacies are on the menu.
It is a feast fit for a tsar — which is exactly what it was 140 years ago. The
Guildhall event is a recreation of a gut-busting blow-out staged in 1867 by
Tsar Alexander II, Tsarevich Alexander and Kaiser Wilhelm I in Paris.
It is also a sign of these extraordinary times. This is the elite of a new
empire at play, and a solid gold bookmark in the annals of indulgence.
Imperial fortunes are once again being made almost overnight, not in the
mines of far-flung colonies, but on the trading screens of global banks and
the boardrooms of private equity powerhouses. And the epicentre of this
plutocracy is London.
There’s been nothing quite like it since Victorian entrepreneurs bestrode the
world and built vast country piles on the proceeds while ragged Dickensian
children tugged forelocks and clambered up the chimneys.
The three-tsars dinner is in aid of charity, and few would carp at the rich
sparing a few grand for Unicef and needy youngsters. But in a year of record
City bonuses the squillionaires are looking a little too stuffed with foie
gras and self-satisfaction for the liking of some with their noses pressed
to the window.
A hint of bolshevism is in the air, with the GMB union castigating private
equity investors for perceived iniquities. Revolution is not on the cards,
but questions are being asked.
The “new Victorians” have the enormous wealth of the imperial age, but do they
also have the moral conscience and sense of duty that drove the 19th century
tycoons to help the poor? In short, are those who’ve profited from the good
times giving enough back? And if they aren’t, how can they be persuaded to
do so?
It’s hard to grasp the scale of what is happening, partly because we have
become so inured to reports of riches spewing out of the global slot
machine. But a few scatter-gun statistics give some perspective.
The starting threshold for this year’s Sunday Times Rich List will be assets
of well above £60m (the precise figure has yet to be set). The list covers
just the 1,000 richest in Britain. Philip Beresford, its compiler, estimates
there are 30,000 people worth £5m — and possibly many more than that — but
these are the small fry.
This year the City is dishing out record bonuses of £9 billion to the 325,000
people who work there. One banker received a bonus of £50m. More than 3,000
people are thought to be getting annual bonuses worth £1m or more.
To many high flyers a bonus of £100,000 is peanuts. The average basic salary
in Canary Wharf, the eastern outpost of the City, is now more than £100,000
a year.
Millions of ordinary policyholders in pension and insurance funds have not
seen much from this bonanza: the bonus rates on their policies in recent
years have often been close to zero. The median salary in Britain outside
the City honeypot is just £24,000 a year, the average (which is pulled up by
the higher earners) is £29,000.
The gap between top and bottom has widened markedly. At the apex are the
entrepreneurs, epitomised by Sir Philip Green, who left school without a
single O-level and fought his way from ragtrader to billionaire owner of
Top-shop, Bhs and other stores.
Next month he’ll celebrate his 55th birthday by taking 300 friends on a
five-day luxury trip to a mystery destination. If his 50th is anything to go
by it will be a bash of monster proportions: he spent £5m taking 250 to
Cyprus for a toga party worthy of a Roman emperor.
Other plutocrats include Lakshmi Mittal, who bought a house in London for
£70m, and Michael Spencer, who started the money broker Icap with £50,000
and is now worth more than £600m. He works in London but likes to go
shooting for the day — in Spain.
Or there’s Eddie Jordan, motor racing multi-millionaire, who last month
dropped into the London Boat Show and picked up a Sun-seeker superyacht at
£10m. Among the more notable playboys is Vincent Tchenguiz, a property
entrepreneur worth nearly £500m with his brother, whose range of motors for
cruising London’s clubland includes two Rolls-Royces, two Bentleys, two
Range Rovers, an Aston Martin and a purple Lamborghini.
Around the entrepreneurs and chief executives cluster the bankers, brokers,
hedge fund managers, private equity players and lawyers who foster and feed
off the giant deals of today’s global market. Leader of the pack is Damon
Buffini, managing partner of Permira, Europe’s largest private equity group,
which now owns businesses such as AA, New Look and Travelodge.
Last week he defended his industry saying: “We are making the UK effective in
a global economy.” The profits made by private equity investments help
pension funds and other public investors, he said.
Another venture capitalist, who preferred to not to be named, was blunter.
“We’re parasites,” he said. “But very successful parasites, and ones that
can help the host.”
These are the “two and 20” guys. Typically they raise funds by persuading
banks, pension funds, insurance companies or rich individuals to give them
money to invest. They then take a 2% annual management fee and 20% of any
capital gains.
The firms are often small in staff and big on money. You might get a firm of
10 senior staff handling a fund of £500m, which works out at £1m apiece just
in annual management fees — before any capital gains. The hedge fund group
Odey Asset Management, for example, lists 12 senior staff and manages more
than £2 billion.
It’s little wonder that nightclubs such as Movida in central London have
“premium clients” who blow £3,500 a night, rising to £10,000 at weekends,
mostly on champagne.
One night at Movida there was a competition between three groups over who
could spend the most on champagne. “It was like the World Cup,” said Eamonn
Mulholland, a director of the club, “three groups trying to outdo each other
by buying more jeroboams of Cristal, at £4,500 a bottle, than the others.”
In this world the line between business and pleasure often blurs, which has
provided a lucrative niche for Ayo Johnson, who runs a service called Velvet
Rope organising everything from restaurant bookings to overseas trips for
super-rich brokers.
“I’ve done everything from booking football tickets to a three-day party in
Marrakesh put on by a bank for its client,” said Johnson. “Business is
booming. But this is not extravagant stuff. This is people working
exceptionally hard, playing hard and making money all at the same time.”
In the arms race of wealth, exclusivity is all. One London banker is currently
having his house refurbished. The work includes his own ice rink. Next week
the wife of one British banker is flying out to a tiny island in the Bahamas
called Little Whale Cay for some R and R. She’s “chartered” the whole island
for herself a few friends and her personal trainer. A snip at £28,000 for
the week (food and drink extra).
“Necker [the Caribbean island owned by Sir Richard Branson] is rather common
these days,” said one of those in the business. “It’s too much of an airline
extension.”
Luxury is not a crime. So does any of this matter, given that we have all been
getting richer, albeit the poor at a marginal rate compared with those at
the top?
The public are growing uneasy. An ICM poll last week showed that 73% of those
surveyed thought City bonuses had become “excessive and something should be
done about them”; 69% believed the gap between the highest earners and
average earners was too high.
Even Sir Peter Lampl, who made his millions in private equity before becoming
a philanthropist, is troubled. “There is no question we are living in a
remarkable time, especially if you consider the growth of the hedge fund and
private equity sectors over the last 10 years,” says Lampl. “These
enterprises control vast sums of money on which they make high returns,
which benefit very few people.
“I’m afraid the impact is not entirely positive. Social mobility has declined
over the last 30 years and in Britain is the lowest for any advanced country
for which data is available. A major reason for the decline is that there is
an increasing gap between rich and poor.”
Nor is it just the poor who are being left behind. Lampl believes ordinary
professionals are being priced out of certain ambitions — such as property
and education — they once aspired to.
“I live in Wimbledon, which is not particularly special,” he says. “But you
couldn’t afford to buy a house in my street these days unless you worked in
the City.”
The last time the gulf between haves and have-nots was this wide was a century
ago or more. The London of Queen Victoria was a city of extremes: it was the
greatest port in the world and merchants, bankers and industrialists lived
in style. It was also packed with festering slums and sweatshop labour that
helped to build the fortunes of a few.
Poverty now is relative, not absolute. But to an extent there are some
parallels with Victorian times.
“What’s happening now reflects the trends in Victorian mortality rates,” says
Judith Flanders, historian and author of several books on Victorian life.
“The average age of death is widening between difference social groups.”
In the 19th century the average life expectancy of a well-off family in the
home counties was 49; for a working man’s family in London it was 15, a
figure that reflects the appalling infant mortality rate. The difference is
not so extreme now, but a labourer in Glasgow can expect to die much sooner
than a retired banker in the sout east.
Faced with social divisions and occasional riots, the Victorian upper and
middle classes determined something must be done to help the poor.
“One difference with today is the very explicit emergence of social conscience
in the Victorian period,” says Jerry White, author of a new book called
London in the 19th Century. “It was what Beatrice Webb called the
consciousness of sin — the view that wealth was out of kilter with a very
substantial minority in London still mired in poverty and ignorance.
“There was this consciousness that individuals who had done well should be
paying something back, not just at arm’s length, but by personal engagement.”
It was epitomised by the “settlement movement” arising in the 1880s in which
large numbers of the better off engaged in projects to create colleges,
clubs and voluntary organisations to help the poor.
“These things aren’t utterly absent from the current City,” says White. “There
are individuals who are encouraged to engage with deprived parts of London.
But I think you could argue that in the 1880s it was a broad movement in a
way that it isn’t now.”
The motivators for widespread philanthropy today are less obvious, he admits.
In Victorian London, starvation was a problem in a way that no longer
applies. But other facets of poverty are more complex.
Flanders argues that the sweatshops and poverty wages that blighted Victorian
London are still with us, just no longer on our doorstep. “The £1 T-shirt
you can find on a British high street is bought with sweatshop labour just
as much as the Victorians would have been heating their houses with coal
produced from children going down the mines. But we have outsourced it to
China and the Far East, so it is easier for us to shut our eyes to it.”
Britain’s record on philanthropy is patchy compared with the Victorians and
modern America, where Bill Gates is leading a huge wave of good works by
dedicating much of his estimated £30 billion fortune to his charitable
foundation. Individuals give 0.73% of GDP to charity in the UK, and 1.7% in
the US.
A survey of giving in the UK for 2005/6 by the Charities Aid Foundation shows
the “bonus boom” has not led to any marked increase in good works. The total
amount donated in 2005/6 was £8.9 billion, pretty much the same as the year
before.
The better-off — those in professional and managerial occupations — make
bigger donations than the poor and contribute 57% of all money given. But
judged by donations as a percentage of income, they are less generous than
those lower down the scale.
The average donor gives 1.2% of income in a year; but for “high-level” donors
the figure is 0.8%. Why is this? And how can the super-rich be persuaded to
cough up more for the poor?
Felix Dennis, the colourful publishing entrepreneur, believes the British rich
may not be as miserly as some suspect when casting eyes across the Atlantic.
They just give it away less publicly.
“The wealth in the US is greater — it depends on the percentage you give
away,” he says. “I know a lot of high net worth people in Britain and I know
they do a lot of good stuff.”
There are problems to consider, he says. “If you are an entrepreneur you never
get a firm grip on what you are really worth. Assets go up and they go down.
You don’t know how much to blow or give away.”
Mind you, he’s admitted spending millions in his years of hedon-ism, when he
pursued women, wine and the high life with an energy that nearly did him in.
He now wishes he’d spent more on trees. He is in the process of trying to
restore Britain’s native woodland and hopes to create a national forest.
Other figures among Britain’s super-rich have pledged vast sums to good
causes, notably Sir Tom Hunter, the Scottish retail entrepreneur. Recently
he has given more than £78m towards improving health and education,
particularly in Africa.
Philip Richards, a hedge fund manager with a strong Christian faith, has
regularly given 10% of his income to charity and last year gave away almost
half.
The Children’s Investment Fund (TCI), a hedge fund, passes part of its a slice
of its earnings to helping children and Aids victims in the Third World.
A new type of giving is emerging from the entrepreneurial culture and creating
specialist advisers to go with it. Nigel Harris is chief executive of an
organisation called New Philanthropy Capital, which helps donors find
suitable recipients for their gifts.
“We are beginning to see a group of new donors coming through,” he says. “The
driver for these guys is that it isn’t about social advancement, this isn’t
about making friends; it is about making a difference. The driving
motivation is effectiveness.”
Lampl, who set up the Sutton Trust to provide educational opportunities for
the nonprivileged and has spent £20m of his own money on it, sees the same
phenomenon. “There is cause for optimism,” he says. “In the 10 years since I
set up the Sutton Trust the climate has changed considerably in this
country.
“Charities are becoming more effective at engaging with their donors, and
donors themselves have prompted higher standards of performance and
evaluation in the charitable sector. An advantage of individuals making an
awful lot of money, often at a young age, is that they are prepared to give
their time as well as their money.”
The city investment bank of Gold-man Sachs has participated for 10 years in
Community Team Works, in which its staff spend a day working for charitable
organisations. And recently it has raised a $1 billion bond to help
vaccination programmes in 70 poor countries.
Some of the largest private equity outfits, now feeling the heat, last year
set up a European charitable foundation, with particular emphasis on
children’s causes.
The London image of self-serving “celebrity giving” — largely through lavish
and highly publicised charity bashes — is also slightly misleading. Last
year the financier Arpad “Arki” Busson staged a gala dinner for 1,000 guests
that involved a giant mechanical elephant and a concert by Sir Elton John.
Jemima Khan, Sting and other stars mingled with the City elite, and the
charity auction raised millions. One guest bid £250,000 for the chance to
work on a new painting with Dam-ien Hirst.
Behind the glitz there were more serious and discreet players. Anonymous
benefactors of Ark, the charity set up by Busson, matched every £1 raised
with another £3, boosting the total proceeds to £18m.
“Here it is not about named endowments, it is done collectively,” said Paul
Bernstein, who runs Ark. “It is about being part of a larger group that
leverages talent as well as gives money.”
Nevertheless, in Lampl’s view many of the people making fortunes today are
still putting little or nothing back. “In the States if you are successful
you are expected to do something,” he says. “If you don’t, people think
there’s something wrong.”
Part of the problem, says Lampl, is that the UK provides tax breaks for
charitable gifts in a more complicated way than in America. By simplifying
the system, he argues, the government could encourage the wealthy to put
their riches to work helping others. The Treasury is reluctant to make
changes, however, fearing that tax breaks will lead to abuse and tax evasion.
More generally, Britain still suffers from a culture of secrecy and cynicism,
says a member of one top US bank in London.
“In the US [giving] is upfront and open,” he says. “In the UK we still have
the politics of envy. People are cynical — they ask why you are giving and
say you are only doing it so people think better of you.
“So people do it in private. That means there’s no peer pressure, so people
maybe don’t give so much.
“It’s a tragedy. We need to create a more virtuous circle.”
Virtue? That sounds rather Victorian.
""Anonymous benefaction is an angelic trademark. It is perfectly easy to make a significant donation without advertising oneself as benefactor if one is sufficiently satisfied with an interior glow of satisfaction.""
YES......Indeed it is true well!
Joshua Ybanez, Mississauga, Canada
Anonymous benefaction is an angelic trademark. It is perfectly easy to make a significant donation without advertising oneself as benefactor if one is sufficiently satisfied with an interior glow of satisfaction.
Named benefactions are not to be completely ignored, yet they do smack of self-celebration.
Better some self-seeking or competitive donations than none at all.
Morgan Russell, Vienna, Austria
Oh No, a Purple Lamborghini.
You should take that and have it resprayed a slinky black,
It's okay having money, but you gotta have Style.
Love to you both,
Lilian,France
lilian, Pons, France
Lots to look forward to.
Henry Percy, London, UK
i agree with that statement which connotes virtue. But we as an individual we should focused on how we can help than making crticism to our fellow human being!
Joshua Ybanez, Mississauga, Canada
It's the same old story: the poor only get charity if they are deserving of it. This is a view that colours most all of giving to the less fortunate in this country. Fine! Stand back and let them pull themselves up by their own bootstraps! But the poorer elements in our society cannot build a tube line from London to West Croydon, cannot link up the tram with another form of fast, safe transport and cannot make the hideous journey to and from the richer South any the less painful for those who are stuck with travelling on it. I loathed the smugness of the man from "Eurostar" who took great delight in the move to Paddington Station from Waterloo. You could see the £ signs in his eyes as he gloried in the competition with the airlines with little realisation that the south has lost out again. Fly from Stanstead? Not if you live in the South. No easy rail link exists, nor is one planned. On TV we see millionaires giving money to individuals and small groups. That's big of them!
Carlyle Braden, Croydon, U.K.