The opprobrium that is now being heaped on public sector 'fat cats' is pernicious, small-minded and innumerate
As spending cuts bite, stand by for rage – not so much against the cuts themselves but against public sector ‘fat cats’. If top executives in local authorities, hospital trusts, universities and quangos didn’t pay themselves so generously, we shall be told, frontline services could be saved. Communities Secretary Eric Pickles is already on the warpath.
This campaign against high public sector pay is pernicious, small-minded and innumerate. Manchester City Council, as widely publicised, is cutting £110m or 8.8% from its budget. It has 31 employees on more than £80,000, including a chief executive on £204,000. If they all accepted £79,999, this would still leave, at best, £107m worth of cuts.
As a remuneration consultant told an MPs’ select committee last year, ‘the cost of employing public sector talent is low compared with the private sector’. Employees of hospitals or local councils used to enjoy a sense of doing valuable and valued work for the public good. Trust and respect were significant rewards, perhaps the main ones.
To mention such things is now thought soft-headed. For 30 years, successive governments have proceeded on the assumption that public servants are, to borrow terms invented by sociologists, knaves not knights. Politicians repeat, ad nauseam, that the public sector needs private sector disciplines and competitive pressures. Then they are indignant when top executives act, in spirit if not scale, according to the same moral standards as bankers.
Lefties like me dislike high salaries. The idea of a fixed ratio between the chief executive’s salary and that of the organisation’s lowest-paid worker warms my egalitarian heart. Will Hutton, conducting a review for the coalition government, proposes a 20:1 ratio in the public sector. The current ratio in shire counties is 15:1 and in large hospitals 14:1. But Hutton predicts that we shall need the 20:1 cap by 2020.
My fear is that young graduates of enterprise and ambition – exactly the people governments say they want to run public services – would steer clear. Most likely, they already do. Only one public sector worker in 280 earns enough to get into the top 1% of UK earners, against one private sector worker in 85.
All the sound and fury concerns 20,000 people, four-fifths of whom are not the much-hated managers but professionals such as doctors and judges. A shire county chief executive – probably on £200,000 or more – will control a budget of some £850m. The boss of a private company with similar turnover will get at least three times as much. The chief executive of Serco, a leading private contractor of public sector services, got £1.5m in 2009, excluding long-term stock options.
Why the silence about this fat cat, also living at taxpayers’ expense, and the incessant clamour about people earning at most one-seventh of his salary?
Even the latter’s famed job security is a myth. The average tenure of a council chief executive is less than five years, slightly shorter than for a top company boss. More than a third of council chiefs leave after clashes with politicians. The risks and pressures attached to public accountability are now no less than those entailed by shareholders’ greed for profits.
It is said that putting a cap on public sector pay would set an example, shaming bankers into moderating their remuneration. But bankers know no shame. They would see restraint in the public sector as a vindication that what it does is worthless.
Worse, young people would draw the same conclusion.
What we pay top public sector employees reflects how we value the services they run. If, as is so often alleged, they discharge their duties lazily and incompetently, it is no more than we deserve.
Peter Wilby is a former editor of the New Statesman
