Corin Taylor: Public Sector Rich List 2007

Corin Taylor, Research Director of the TaxPayers' Alliance, reveals this year's public sector rich list and explains the reason for it. The full list can be downloaded here.

In November 2006 the TaxPayers’ Alliance produced the first ever list of the most highly paid people in the public sector.  Now the time has come to repeat the exercise and so in the second edition of our annual Public Sector Rich List, we reveal 300 public sector executives receiving remuneration packages of at least £150,000 a year in 126 government departments, quangos, other public bodies and public corporations.

Trawling through the annual reports and accounts of these public bodies to dig up salary, bonus, benefit and pension details of public sector executives is an interesting, if often depressing, exercise.  We do it for two main reasons.

Firstly, people and organisations that receive large amounts of taxpayers’ money should be accountable to the public they serve. Taxpayers should be able to judge for themselves whether the remuneration of senior officials represents good value for money.  In an ideal world the remuneration packages of public sector staff (at the very least senior staff) would all be made publicly available in the same place on an official website.  People are unlikely to begrudge reasonable salaries being paid, but would be right to disapprove of average pay rises of almost 13 per cent, and right to question whether the 10 most highly paid public sector executives are really worth 400 nurses, police officers or soldiers. 

In the US such transparency is fast becoming the norm.  The salaries of all state employees are available on the Iowa state legislature website for the public to view.  Missouri will follow suit in January 2008.  In Kentucky, Michigan, Oregon, South Carolina, Vermont and West Virginia, databases of state employee salaries are also publicly available, hosted on local newspaper websites.  “Google government” can and should extend beyond public contracts and individual items of expenditure.  After all, it’s our money.

Secondly, we have no problem with people in the public sector being paid well for good performance.  For example, Vanessa Lawrence, Chief Executive of Ordnance Survey, is widely considered to do a good job.  Ordnance Survey, as a Trading Fund within the public sector, relies entirely on receipts from sales and licensing and actually makes a profit for the Exchequer.  But in far too many cases senior public sector officials are being paid over the odds for dreadfully poor performance.

Take Sir John Gieve.  He was moved from the Home Office to the Bank of England following the scandal over missing foreign convicts and severe problems with the department’s accounts.  As Deputy Governor with responsibility for the financial system's stability he then presided over the first run on a bank since 1866.  The Treasury Select Committee Chairman accused him of being “asleep in the back shop while there was a mugging out front” as he admitted he had not read Northern Rock’s interim accounts before the crisis.

Or consider the 2012 Olympics.  Senior staff at the Olympic Delivery Authority and the London Organising Committee last year shared bonuses totalling almost £500,000, despite the budget for the Games rocketing to £9.35 billion in that very same year. 

Perhaps even worse is the package awarded to Sir Peter Spencer, Chief of Defence Procurement at the Ministry of Defence.  Fourteen crew died when a Royal Air Force Nimrod spyplane crashed over Afghanistan earlier this year.  Had a long overdue replacement been in place they may well have survived.  Despite this failure Sir Peter Spencer is paid more than 11 times the salary of an Army private and more than the initial award of £152,000 offered to Ben Parkinson, a paratrooper who suffered 37 injuries following a land mine explosion in Afghanistan, including the loss of both legs.

Three things would make a good start to resolving the problem of overpaid and under-scrutinised public sector executives.  Firstly, pay rises should be closer to the national average of 4 per cent, especially when compared with the 2 per cent target (which we wholeheartedly support) for the rest of the public sector.

Secondly, senior public sector officials should be properly accountable for performance.  By all means pay well for good performance, but poor performance, as in the private sector, should be met with swift dismissal.

Thirdly, there should be a major improvement in the corporate culture of the public sector because people desperately want better government.  Accountability to taxpayers as shareholders in and customers of public services should be the norm.  Such an atmosphere would encourage efficiency and a healthy open relationship between public servants and the public they serve.  Concrete measures should be adopted such as disclosing all remuneration packages on a central website and allowing taxpayers to veto pay rises (using a similar mechanism to the electoral recall process in California) if they think they are undeserved.