So, as a senior policy-wonk and HR adviser to this radical new coalition government, it’s quite obvious to me that our ambitious agenda of 'freedom, fairness and responsibility' has to mean slashing public sector pay and pensions, and particularly targeting public sector 'fat cats', in order to bring down the £160bn deficit. George is in absolute agreement with me on this.
Did you know that average pay levels in the public sector are higher than those in the private sector? We obviously need to extend the existing programme of pay freezes and preferably make some cuts too, like the private sector did last year. Did you realise that a staggering 5,500 public servants and 172 senior civil servants earn more than Dave does, even before he took his voluntary 5% pay cut?. Outrageous. Those nice people at the Taxpayers Alliance are right - we have to stop this salary explosion!
Will’s new Fair Pay Commission - with its 20 times lowest pay cap, and compulsory publication of remuneration data along private sector lines - should soon put a stop to all this. We have already cut bonuses for senior civil servants, and a good bit of performance-related pay for teachers and the like should help.
Nick is also right, of course, that those public sector gold-plated pensions are 'unfair and unaffordable', way higher than the norm now in the private sector. The new independent Office for Budget Responsibility estimates that their costs will more than double over the next five years to £9 billion. We’d better get that down, eh George?
Yes, I do know that the difference in pay between public and private sectors is largely explained by the greater proportion of skilled and professional jobs in the public sector. And yes, I know that that a new CIPD publication Transforming Public Sector Pay and Pensions says we should freeze pay budgets rather than capping individual increases, so that high performers don’t suffer unduly and we can see more creative approaches emerging, like in the private sector last year.
Ok, so I also agree that we are in a very different economic situation now to the private sector's last year, with 5% price inflation meaning that a pay freeze represents a real pay cut this year. Private sector employers will almost certainly not welcome the loss in purchasing power in the economy to buy their goods and services that this will produce, even if they may appreciate the reduced competition for recruitment and haemorrhaging of public sector talent resulting.
Yes, I am sure Will does know that pay differentials in the private sector are far wider, and that FTSE 100 CEO pay is 81 times the average level. Hmm, maybe we should put income tax levels up a bit more for the high paid, though I'm not sure Dave would buy that one!
And I'm sure he knows that most of those 5,500 high paid public servants are in fact medical consultants? Really? Yes, I'm positive. Will also knows that almost as many bankers as this got bonuses of over £1 million earlier this year. And that PwC found that senior public sector leadership roles are still only paid about half of their private sector equivalents.
Well, Vince did describe the bankers’ bonuses as 'obscene' and our coalition agreement commits us to 'robust' action against them. Yes, I know that action isn’t specified as yet. And even Will has questioned if the coalition has the courage to act on this.
It is true, I accept, that private sector employer contributions into occupational pensions have been falling for years, even though we are all living longer. And that the average ‘gold-plated’ pension held by public sector workers is worth less than £5,000. So when Steve has got rid of the Default Retirement Age as quickly as possible, do you think we are going to see many private sector employers with growing numbers of older workers who can’t afford to retire?
No, I havn’t seen the new IES report, Should I Stay or Should I Go Now, exposing the lamentable state of pre-retirement planning by employers in all sectors. So do you think we might need to be ‘levelling’ private sector pensions up, rather than public sector pensions down, or else suffer growing levels of pensioner poverty? No, I’m not sure we’ve costed that one up.
I’ll tell you what, how about we set up yet more independent reviews and commissions to advise us on these difficult issues and tell us the best way to make the cuts we need? That should do the trick.
Duncan Brown is director of HR business development at the Institute for Employment Studies
