LONDON LETTER:Heinz's trial run of a cafe selling mostly beans on toast was more to City workers' taste than a 50p tax rate
IN TIMES of trouble people tend to return to “comfort foods”, the favourites that remind them of home cooking and childhood, or, just perhaps, the days when they didn’t have to justify themselves to everyone all of the time.
The need for such reassurance may partly explain the current success of a temporary cafe three minutes away from Liverpool Street station in the City of London, which is decked out like an ordinary kitchen and, mostly, sells beans on toast.
The cafe on Shoreditch High Street, which opened on Monday but which will close tomorrow night, is a trial by the food group Heinz, though judging by the queues down the street it has hit on a winner.
Customers were asked only to make a 50p donation to the charity Help a London Child.
“I grew up eating Heinz beans on toast as a kid. This is a tremendous idea and a comforting experience,” said Mike Derks, a City worker.
Fifty pence is a figure much on City workers’ minds, but more because of Chancellor Alistair Darling’s decision to impose a 50p tax rate on incomes above £150,000 a year from April onwards than for any charitable reason.
The bankers’ unhappiness about tax rates has been exacerbated by the chancellor’s additional intention to impose a 50 per cent levy on bonuses above £25,000, an action which, from the bankers’ point of view, is showing worrying signs of being copied elsewhere.
This week, the City’s champion, Conservative mayor of London Boris Johnson, weighed in behind the unloved, putting himself on a collision course with his own party, never mind the government.
“Before you attack the bankers of London, remember that this is one of the few global industries in which we truly excel; the City contributes about 9 per cent of Britain’s Gross Domestic Product.
“And before you go whingeing to me about house prices boosted by City bonuses, whatever the disasters of the sub-prime sector, these products allowed millions of Americans to own their own homes,” he continued.
“Of course there are spivs and speculators out there but before we get carried away with neo-socialist claptrap, we should remember the huge benefits brought to this country by bankers and the City of London,” he wrote.
Already, Swiss cantons, Hong Kong and Shanghai have thrown an eye towards London to see what if any fruit can be picked from the tree while the political climate in the UK remains so firmly entrenched.
The popular mood has not been improved by Royal Bank of Scotland chief executive Stephen Hester’s admission before MPs this week that even his parents thought his £10 million (€11 million) salary was too much.
And tempers will not improve in coming weeks when bankers’ bonuses start to be paid out. Darling had intended the levy to be a signal to banks to build up their depleted reserves, but this is now a forlorn hope.
In fact, it may produce a £2 billion dividend to the Treasury’s depleted coffers, since the banks and investment houses seem ready to pay the 50p super-levy rather than face the risk of losing quality staff who can easily find other places to go.
However, the midnight oil is being burned to find ways around Darling’s April tax plans, particularly by giving “compensation” – a word beloved by those whose salary cheques have lots of noughts – in deferred stock, rather than in cash.
If such can be managed, then deferred stock payments would be taxed as a capital gain and thus be liable for an 18 per cent tax rate, unless the chancellor seeks to head them off on that front as well.
Even if the British public is outraged by having had to save the banks only to see staff gorging themselves on new year bonuses, the reality is that wealthy, mobile professionals have options that the majority do not.
“I have never in my entire career seen so many angry people. I have never seen people just so frustrated and feeling coshed all the time,” said Stuart Fraser of the Corporation of London, the local authority that governs The Square Mile.
One bank has already told him that it could move 300 staff abroad “in a fortnight” and others are seriously examining it, he said: “There is a tipping point. If we’re not there yet, we’re so close to it we can barely breathe.”
Over 300,000 people work in London’s financial sector, but one-third are internationals who have no permanent ties to the United Kingdom unless they are tied down by marriage and children. However, the City may well lose future rather than existing business, since London’s international dominance – and the fact that it is a nice place to live if one has enough money – means that leaving is not as easy as some make it out to be.
