In our recent report with the Institute of Directors – How to Save £50bn (PDF) – we advocated a public sector pay freeze as one of key measures to tackle the fiscal crisis. Politicians from all parties followed suit during the Conference season. But in particular we were told that executive pay in the public sector had to be reined in. The squeeze had to start at the top.
George Osborne promised that under a Conservative Government anyone who is to earn more than the Prime Minister will have to have their pay signed off by the Treasury. More recently, Harriet Harman blocked the proposed remuneration package for the new boss of the now infamous Equality and Human Rights Commission. Vince Cable, rarely without an opinion, has also been vocal on the subject.
The TPA’s annual Public Sector Rich List 2009 (PDF) will help to inform this debate. As we limp out of recession, our comprehensive audit reveals that last year over 806 public sector executives earned over £150,000. Our recent groundbreaking work on the semi-autonomous state (PDF) has helped to facilitate a bigger survey than ever, but nonetheless the estimate is still a conservative one.
Those executives in this year’s list managed a 5.4% pay rise last year, which is particularly pertinent when frontline workers across the public services face having their wages frozen to help ease the public debt. Reigning in this culture of guaranteed pay rises and bonuses among public sector executives is an enormous task but one that must be tackled head-on now. Our Public Sector Rich List is the only document that collates high earners in the public sector, and one gets the distinct impression that no politician has a grasp on the true extent of top brass pay. The list is awash with ‘managers’, including those at NHS and Primary Care Trusts. Quango bosses and BBC executives feature heavily too, as do Transport for London (who frustratingly do not disclose the names or positions of any of their 50 staff on over £150,000).
Sometimes public sector officials deserve to be well paid, yet the taxpayer – the shareholders in the public sector – must be in a position to judge this for themselves. Too often they are unable to. The murky grey areas of the semi-autonomous state mean that quangos decide the pay for their staff. In fact it is usually decided by small committees, which sometimes involve the executives themselves. They will say that they have to be involved in setting pay for the rest of their staff, but the process is devoid of any regular, robust parliamentary or public scrutiny. Too many bodies simply get a free hand, while Ministers can point to their ‘arms-length’ nature in order to deflect any blame. It seems that to tackle pay, politicians will have to get to grips with the size and scope of the state itself first.
And this is why the TPA assembles this list every year. Transparency is an important aim itself, but in this case it’s important because it will help breed restraint. Politicians and public sector executives are aware of the public’s anger about these pay packages. The rewards for failure stand out all too loud. It’s time for rhetoric to become action.
