Disgraceful isn’t it, what those public sector managers are paying themselves these days? Who would believe that we have a record public sector deficit forecast to reach almost £200 billion, yet those nice people at the Taxpayers Alliance tell us that there is “an explosion” in the numbers of public servants paid over £100,000, over 1,000 of them in fact. Their Public Sector and Town Halls’ Rich List shows that 12 local authority and NHS trust chief executives are even paid more than the Prime Minister! As we know, his salary of £197,000 is a wonderful benchmark, given how much prime ministers can earn in their subsequent careers.
Scarcely surprising that the politicians are stepping in, with the Treasury imposing a one per cent cap on public sector pay awards, recommending freezes for senior staff and instituting a new star chamber to review any proposals for salaries in excess of £150,000. Shadow Chancellor George Osborne wants to freeze pay for all public sector workers earning over £18,000.
But hang on a minute. Wasn’t it this Government that devolved pay bargaining in the public sector and encouraged the recruitment of talent from the private sector, both of which have driven up pay levels? In fact, a recent PwC study suggested that executive pay levels in central and local government were still only around half of those for equivalent posts in the private sector.
And across the public sector as a whole, 100,000 civil servants still earn less that £15,000 pa and the average payment under one of those famous ‘gold-plated’ defined benefit pension plans is in fact under £5,000pa.
And haven’t we seen significant performance improvements across the public sector in recent years, from a growth in the number of four-star rated local authorities to the significant reductions in NHS waiting lists? I am sure we all look forward to seeing senior public sector pay levels fall and going back to receiving awful council services from disengaged staff and onto long waiting lists for treatment in the NHS.
And didn’t the economic crisis all start anyway in the financial services sector, driven by those excessively incentivised bankers and traders? Here more than 1000 employees are forecast to earn bonuses of more than £1 million this year, 22,000 Barclays investment banking staff just earned bonuses averaging £190,000 each, and retail banking staff in the UK received average pay awards of over three per cent over the past twelve months.
So just why do we want to cut public sector pay levels again?
Duncan Brown is Director of Reward Services at the Institute for Employment Studies, www.employment-studies.co.uk
Duncan, this is quite an impressive series of misleading assumptions.
For a start, the Public Sector and Town Halls’ Rich List you cite are actually two different reports. As I’m sure you have them read them both in detail, you’ll know that instead of there being ‘over 1,000′ public servants being paid over £100,000 as you claim, we found that there were in fact:
- 1,089 people in local government alone earning over £100,000 (Town Hall Rich List)
- a further 805 people in the rest of the public sector earning over £150,000 (Public Sector Rich List)
As I’m sure you’ll agree, 1,894 people is a lot more than just ‘over 1,000′. And, perhaps more to the point, our surveys are likely to be an underestimate due to the limitations of FoI and the complexity of the state. As transparency is extended, we’ll be able to uncover more and more.
Secondly, the idea that that these are all top-notch operatives poached from the private sector simply is not true. Some parts of Whitehall have seen some increase in private sector recruitment, but town halls and quangos remain the preserve of career public sector staff.
It is wholly misleading to imply that, for instance, an NHS trust chief executive could earn more in the private sector. The NHS is a monopoly, and pay is driven up by trusts, not demand from the private sector. What’s more, as senior public sector pay has soared so has the amount spent on management consultants – essentially meaning we pay once for ‘talent’ then a second time for consultants to tell them how to do their job.
‘Haven’t we seen significant performance improvements across the public sector in recent years?’ – not really, and where there has been improvement it is not commensurate to the huge increase in spending or pay. Public sector productivity, particularly in the NHS, has fallen swiftly. Detailed international comparitors, like mortality amenable to health care in the NHS, show no change in the speed of improvement. The majority of councils have halved waste collections. Public faith in the police is at a record low. Taxes and the deficit have both risen sizably.
As for your point about the financial services sector, this is a flawed comparison for two reasons. First, whilst the economic crisis was rooted in part of that sector, the public finance crisis was not. The majority (over £100bn) of the deficit is structural, rather than cyclical. Second, the example you’ve used is Barclays – which successfully navigated the crisis and is making a profit despite not having taken a bail out from the taxpayer. Taxpayer-funded banks should certainly ban bonuses and focus on repaying taxpayers, but that has no bearing on whether it is appropriate for cash-strapped and inefficient public sector bodies to dish out large pay rises.
Yours,
‘those nice people at the Taxpayers Alliance’
Dear Mark,
There, i said you were nice people, and I am delighted that a short late night rant seems to have stung you so strongly.
If we want to get onto more evidence-based and objective ground then you are doing pretty well in the assumption stakes yourself. My contrast with the financial services sector was not one of pay levels but merely pointing to the lack of government action in that sector, with some frankly awful pay and incentive practices, compared to what they are doing in the public sector, where the outcomes in terms of pay levels have largely come about as a result of government pay policy and policies such as performance-related pay.
What you lack most of all is any explanation of how you determine over-payment. The PwC study and many other reputable pay comparisons clearly show that for equivalent sized roles, central and local government executives on average are still well behind their equivalents in the private sector.
Of course there are examples of over-payment in the public sector, and relatively small jobs paid excessively for the scale of role and performance of the organisation. But the public sector is not alone in that. Another PwC study of FTSE chief executives pay found almost no relationship between the quantum of reward and the performance of the company since 2000.
I suspect we both agree that executive pay levels across all sectors need to be logical and open, and governance reforms in both sectors are now giving ‘owners’ greater powers of redress where serious anomlaies are evident. But vilifying one category or sector’s leaders does little to address the real examples of anomolous pay that span all areas of the economy and are not confined by any means to public servants, even if governments find it easier to control their pay levels.
yours,
duncan
Here we go again! Overpaid public servants milking the taxpayers. Well, we ARE taxpayers and we also paid into our gold-plated pensions funds. In my own case 6% of my salary for nearly 34 years. Yes, I am now drawing a reasonable pension, but do not have a nice consultancy role to pad it out. Neither do I make after-dinner speeches, nor – yet – draw the state pension. I deserve my pension. I am not ashamed to admit this. I was ‘bounced’ into a job that was not of my choosing – in 1995 – as a result of central government ‘reorganising’ local authorities, and spent nearly ten years before being made ‘redundant’ and taking ‘early retirement’. I am sick of ‘public servants’ being regarded as ‘public doormats’ in some quarters. This latter phrase reminds me of a former manager of mine, when being berated by a woman who was being prosecuted for non-payment of ‘rates’ (remember those days?). As he took the insults, in front of a queue of people, he commented: ‘Madam, I am a public servant, not a public doormat!’ That was in 1974, and I have never forgotten it. We do a good job and get paid for it. Simple as that.