13 October 2006
Salaries for Whitehall directors rose by 7.4% last year – almost twice the rate as for the rest of the UK's workforce. But some executives have been rewarded despite poor performances, critics have claimed.
New data on directors' pay at executive agencies and public bodies this week revealed that salaries for high-grade staff soared last year, boosted by the recruitment of private sector expertise into the public realm.
The survey of salaries and bonuses, undertaken by Incomes Data Services, shows that John Armitt, the chief executive of Network Rail, was the highest-paid employee in the public sector in 2005/06.
Armitt's salary reached £878,000 last year, around 25% of which was performance-related.
His total remuneration package rose to more than £1m once his pension contributions were included.
Adam Crozier, the chief executive of the government-owned Royal Mail, received a similar salary.
Other big earners included Stephen Carter, the former head of communications watchdog Ofcom, who earned around £440,000.
The IDS study, edited by Steve Tatton, reveals an overall average salary increase for Whitehall-based directors of 7.4%, which compares to 4% across the rest of the UK workforce.
Lead executives in public bodies earned a median salary of £206,000 and an average of £327,243. In agencies, the figures were lower at £122,500 and £128,437 respectively.
IDS's analysis of key posts also shows that 'finance directors of public bodies, with a median basic salary of £134,934, are the highest-paid directors after the lead and deputy executives.'
Ruth Lea, head of the Centre for Policy Studies think-tank, claimed that 'the scale of public sector pay increases is beginning to take the mickey'.
She said it was 'extraordinary' that public executives received large salaries without taking the risks and achieving the performances that merit similar wage deals in the private sector.
Meanwhile, the Department of Health this week revealed that Richard Granger, the man in charge of the NHS's troubled IT overhaul, is potentially the UK's highest-paid civil servant.
Granger's salary, according to the department, is between £280,000 and £285,000. That compares with the £264,000 paid to Sir Gus O'Donnell, the Cabinet secretary and head of the civil service.
Click here for details of directors' pay.
Report calls for R&D body to focus on government business
A new strategic body should be set up to drive innovation across government and deliver more savings to the public purse, industry leaders said this week.
A report, produced jointly by the CBI and the technology company QinetiQ and published on October 10, called for the establishment of an Advanced Research and Projects Agency, which would accelerate the adoption of new technologies and services across the public sector.
Operating at arm's length from government, the body would provide research and development for government business and would be backed by funding to put it on a par with other major research councils.
CBI director general Richard Lambert said: 'The government's annual procurement budget, a massive £150bn, is almost nine times more than UK companies spend on research and development. If just a portion of this was targeted at nurturing and acquiring innovative products and services it could deliver dramatic returns.'
Lambert added that, just as cutting-edge Formula One technology finds its way into family cars, 'more government-sponsored innovation could lead to massive breakthroughs for public services, in anything from health care to waste recycling'.
Sir John Chisholm, the chair of QinetiQ, said the public procurement programme could be used to foster innovation and entrepreneurship. He said: 'This is something that is under our control, can be done now, and will have immediate impact.'
A second CBI report, also published on October 10, extended the call for smarter purchasing across government by urging all government departments to establish a commercial directorate, staffed by procurement professionals. There was criticism of civil servants' lack of skills and experience.
Kevin Beeston, chair of the CBI's Public Services Strategy Board, said: 'Taxpayers pay dearly when procurement is risk-averse, bureaucratic and categorised by delays and changing specifications.'
The Office of Government Commerce supported such a move. A spokesman told Public Finance: '[The OGC] believes that where commercial directors have already been appointed or where commercial directorates have been set up, they have had a significant and positive impact.'
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