£23,000 monthly fee for David Cameron's guru

Today's Sunday Times reveals that David Cameron's top adviser Steve Hilton is receiving the equivalent of £276,000pa from Tory funds:

"The marketing genius behind David Cameron is being paid £23,000 a month by the party, the equivalent of a salary of £276,000 a year. Steve Hilton, a former employee of the advertising agency Saatchi & Saatchi, is an old friend of the Tory leader and gets a monthly fee as a consultant to the party.  However, party insiders insisted last night that the arrangement was “transitional” while he was freeing himself of his business interests and that he would soon be joining the regular payroll."

The Observer also has the story:

"Details of the payments to Hilton make him the highest paid adviser in the history of the Conservative Party, earning £150,000 more than Cameron himself and almost £100,000 more than the Prime Minister. Even when Alastair Campbell, the former Number 10 Head of Strategic Communications, was at his peak of his influence, he earned £131,000."

Mr Hilton has a long track record of working for the Conservative Party.  He is romantically involved with Rachel Whetstone, Michael Howard's former political secretary, and he devised the Demon Eyes negative advertising for the 1997 campaign.  Eyes will be flashing green - rather than red - as co-workers learn of his remuneration package.  All will undoubtedly be forgiven, however, if Mr Hilton helps to put David Cameron in Downing Street.

The Conservative Party has a track record of paying large sums to key advisers.  Michael Howard is thought to have paid Australian Lynton Crosby £250,000 for directing his 2005 election campaign.  The 2005 campaign was tarnished by a row over the fees paid to a firm owned by Lord Saatchi, then Tory Chairman.

Comments

[Paul Kennedy]

No problem with high salaries at all, provided the recipients produce the results and have been set demanding, clear, measurable and objective targets. Lack of achievement should result in swift removal.

[buxtehude]

What does this say about the 'Conservative Brand', Mr Hilton? On the outside you are saying that the Conservative Party is now for ordinary people. But the truth 'inside the can' (as they say in your marketing circles) is that this is a project run for the privileged. There is no way, Mr Hilton, that you were paid £276,000 a year at Saatchi and Saatchi! My guess - maybe you can confirm - is that it was closer to £100,000.

So HQ says this is a 'transitional' arrangement. Well, why not regularise it in, say, 24 hours? Or is CCO as bureaucratic as the worst public services? How is one to expect this bunch to run the British economy when they can't run their own little business?

[Andrew Woodman]

Or is CCO as bureaucratic as the worst public services?

We all know CCO is a shambles and a black hole where money is concerned. That is why these donation cap ideas will be interesting tomorrow. Will CCO have to be scaled down or are they going to try and rip off the local associations for more money.

[AlwaysAmazed]

But Paul, how high is too high? I have no problems with people being paid for their true value. But as The Observer pointed out, Alistair Campbell received £131,000 - and that's for the best of his kind. Steve Hilton has yet to live down the flashing red eyes.

[buxtehude]

"Will CCO have to be scaled down?" No, not in terms of its delivery - that can only be scaled up. But it will have to be scaled down in terms of its spending on the special friends.

In the spirit of David's vaunted love of transparency, I look forward to learning a lot more about money flows within the Conservative Party. It will be interesting to see not only how much advisers are paid, but how those same advisers spend the party's money with outside agencies. I imagine that if we had transparency, there's a lot that would surprise us, and the flow of donations would become a mere trickle.

[Paul Kennedy]

To be honest Always Amazed, I can't tell you how high too high is, but for £276,000 per year I will be looking for some superb election results on May 4th.

[Geoff]

Maybe if he waived his salary for four years, we could swap that for his peerage at the full market rate....

[Jack Nevinson]

I'm surprised we haven't had the Cameroonians piling in saying "How dare you question this paltry sum? Don't you understand that you have to pay top rates to get top results? And have we not seen the most brilliant re-branding of the Tory Party? Sure, the polls aren't that great, but that's because these things take time. £276,000? We should feel honoured to pay twice that much."

So to save time, let me point out that Steve Hilton's pay is above-average for the boss of a mid-cap commercial company, let alone for a bumbling media adviser.

[Mark Fulford]

"let me point out that Steve Hilton's pay is above-average for the boss of a mid-cap commercial company"

...but is the same as he was paid last year (£100K salary + £176K dividends). In other words, this is his market rate.

[James Hellyer]

Not really, Mark. The dividend relates to his ownership of a company. As that component of risk and reward is missing from paid employment, it cannot reasonably be included in calculating a suitable salary (especially as he'll likely keep his shareholding even when he doesn't work for the company).

As an employed director, rather than an owner director, of a company that size, I'd expect his salary to be more in the £100 to £150 thousand bracket.

[James Hellyer]

By party standards this is a high salary, especially as Mr Hilton is presumably still drawing a salary from Good Business. Does that mean it will go up when he's disentangled his business affairs?!?

[Jack Nevinson]

James Hellyer is absolutely right: Hilton's dividends have nothing to do with his market rate but apply to his shareholding. He will retain those dividends so long as he retains his shareholding.

But maybe the similarity between the numbers reflects what he has argued with the Conservative Party, and their acceptance of it reflects their incomprehension at how the market works. Or maybe they just don't care about the market, so long as well-meaning chaps like Mark can be relied upon to smile and pay up.

Steve Hilton's true market rate is about £100k, maybe £125k, as his previous salary shows. The Tories' willingness to pay more than double shows how incompetent they are in business and economic matters.

[Mark Fulford]

In an owner director situation, the split between salary and dividends is often a tax-related decision. He could have paid himself £176K more salary, but then he'd have £176K less company profit to pay out as dividends (well, roughly anyway). In an owner director situation, the structure of their pay is a matter of convenience – it’s the amount of £££ into the bank account that counts.

[James Hellyer]

Mark, the point is that the remuneration level in question relates to ownership of the company and not the value of his services per se. The profits are his to extract because of ownership. That doesn't mean that if he was merely employed he would receive the same remuneration, because someone else has the risk of ownership.

That element of risk and reward does not apply to his arrangement with CCO. If the party collects more donations, he can't vote himself a dividend. If the party defaults on its loans, it won't be him that faces charges of fraudulent trading. As there aren't the risks to his capital, there shouldn't be the same elemtn of reward.

[Jack Nevinson]

Oh Mark, you do get points for trying. Even if what you say were appropriate to his company, his remuneration would be for his creation of and running of his company. But his job at CCO is as an adviser. You will not find many brand consultants being paid £276,000, trust me on that.

And do you think that in next year's accounts we will find Steve Hilton taking no dividends from his business?

However, mark, if you're prepared to go out fundraising on the basis that we need to pay Steve £276,000 a year, then good luck to you.

But I think the folks out there are more likely to consider this more 'snouts in the trough', don't you? I mean, be realistic, Mark.

[Mark Fulford]

And do you think that in next year's accounts we will find Steve Hilton taking no dividends from his business?

It all depends upon the ownership structure. If he's the only one that creates income for his company then no, there's no profit & no dividend.

I have no idea of the structure of his company. Do you?

[Jack Nevinson]

The website is surprisingly coy about 'who we are' - most companies have it (a fairly detailed 'about us' section), but 'goodbusiness.co.uk' doesn't. Surpringing for a company advising on ethical business practices.

But you're missing the point, Mark. £276,000 a year is too much for the Conservative Party to pay for a brand adviser. It's as simple as that. If you don't get that, you obviously don't get what is supposed to be the Conservative brand-re-invention!

[buxtehude]

"It all depends upon the ownership structure."

Did you think you would have to be going into so torturous a defense of Conservative ethics so early in David Cameron's leadership, Mark?

It's the same old story. Privileged insiders run DC's world. The rest of us have to pay.

[Jack Nevinson]

Ah, I've just read the Observer article in full. So should you, Mark. It turns out that Steve Hilton is still working part-time for Good Business, so that makes a mockery of your previous defence.

I wonder if Nike is still a customer? Nike, you might remember, were praised by David Cameron for their ethical behaviour, contrasted with the chocolate-selling criminality of WHSmith.

[AlwaysAmazed]

Let's try to get some straight answers from the party:

1) Why is CCO paying SH exactly what he got at Good Business (including dividends), if he is only working part-time for the Conservatives and part-time for Good Business?

2) If on the other hand he is working full-time for CCO, then is the consultancy payment simply a ruse to avoid tax and NI?

3) If he still has commmercial clients, do they get special treatment from the Conservative Party (why, as Jack has pointed out, were Nike contrasted favourably to WHSmith?)

4) Who else at CCO is being paid absurdly high rates?

5) Who else at CCO has conflicted party/private-agency interests?

[Rebel]

Hilton is the man most responsible for the leftward drift of the Tories. He is therefore most responsible for the awefull poll results: -4% against Labour. He should be fired. And he should be fired tomorrow.

[Jack Stone]

Personally I couldn`t care less what Steve Hilton is paid. The marketing of David Cameron and the party as been superb since the leadership election and frankly I think if we were paying him a million pounds a year he would be worth it.
If you want the best you hasve to pay the best!

[buxtehude]

"Personally I couldn`t care less what Steve Hilton is paid... I think if we were paying him a million pounds a year he would be worth it."

Fantastic, Jack! That's exactly what we expect from a party that wants to run the economy! From a country that is supposed to understand business!

But even if we accepted that madness, it would onoly make sense if it was linked to some kind of performance indicator. I mean a performance-indicator slightly more objective than the lapdog-style, pissing-himself-with-glee Cameron-devotees to be found on this blog.

[kingbongo]

I think we go by results for work produced and the first real test for that is May 4th - from what I've read elsewhere we should be gaining 200+ seats in London to be seen as doing well and that seems a fair judgement. If we don't then these sort of salaries should be very much open to question as I suspect a lot of much more local spending of money would reap higher rewards.

For someone in this role to be paid twelve times as much as the average college lecturer (ie. me) seems a bit much, but then when I had my own business I paid myself lots of money because my customers kept chucking it at me and it seemed rude to say no. If DC thinks he's worth it that's OK but I, and I think quite a few others, need to be convinced an equally good job couldn't be done for very much less or even voluntarily.

[James Hellyer]

2) If on the other hand he is working full-time for CCO, then is the consultancy payment simply a ruse to avoid tax and NI?

That wouldn't work. IR35 was invented to allow the revenue to pursue employers for NI and employees for Class 1 contributions in those circumstances.

[James Hellyer]

I think we go by results for work produced and the first real test for that is May 4th

So you'd give Steve Hilton the credit for the work of candidates, canvassers, and indeed the whole voluntary party? Not to mention the pre-Cameron team?

[a-tracy]

I'm sad that the party thinks that it's so unelectable that it needs someone on a quarter of a million pounds pa to work out how to get their message over.

I believe that ConservativeHome is getting that message out to the growing number of people that read on a regular basis and not just party members, in turn people like myself then spread the messages picked up on this blog to other people that don't have the opportunity to read it.

What this blog shows is that it is content that is important along with the participants and not the slick logo's and flash videos seen on more expensive websites. If people are conned into electing an image with no substance (as it's been with NuLabour) then they're disappointed and let down when what they thought was going to happen doesn't and they lose their NHS dentist and their local doctors out of hours service and the children's learning isn't what modern business is looking for (even though the buildings look better!)

Laying off staff in my parents local NHS pct isn't what the voters elected the Labour party to achieve. Kicking people out the day after an operation to cut down on care costs is just another example of how we're paying for their mistakes.

[Jack Nevinson]

Point 2 is irrelevant because they've already admitted that he's part-time. So it's Point 1 that matters: why are they paying him for part-time work the same rate as he was previously paid full-time? And Points 3 to 5 certainly need answering.

[Chris Palmer]

I reckon I could do his job two times better and I would be willing to take a pay cut of, ooh, say two times. Come on David Cameron, sign me up - you know it's worth it.

[Mark Fulford]

But you're missing the point, Mark. £276,000 a year is too much for the Conservative Party to pay for a brand adviser. It's as simple as that.

Jack N, apart from trying to provoke Cameron supporters, your first two posts made only one point: to question Steve Hilton's market value. I simply pointed out that Steve Hilton's income is £276K – and therefore this amount is his market value. In an owner director situation, the division between salary and dividends is arbitrary because it is within their power to adjust the balance however they wish. With a pot of £276K, an owner director can make it all dividends, all PAYE, or somewhere in between.

Steve Hilton’s job at CCO will be less secure than his job at Good Business. And if he is capable of earning £276K a year, why would he take a £176K cut to work for the Conservative Party? That would effectively be a donation, and one of almost twice the editor's proposed cap.

Whether the Conservative Party should be paying £30K a month for Steve Hilton's services is an entirely different matter. I'm prepared to trust those people who see his work day-to-day on this.

[kingbongo]

So you'd give Steve Hilton the credit for the work of candidates, canvassers, and indeed the whole voluntary party? Not to mention the pre-Cameron team?

that's not what I meant James and I think you know it. My point was that you and others have a visceral dislike of the current leadership of the party and so anything it does is automatically beyond the pale.

My point was that I find the amount of money very high but if the leadership team, including Steve Hilton, deliver results then I am (just about) willing to live with these sort of salaries. Doing well in May is obviously a team effort from door knocking to strategic campaign decisions.

I think it's a pity that you quote that bit of my answer back to me with a snide comment rather commenting on the clear message that paying people 12 times the national average salary means they need to produce extremely good results.

I don't know if you'll be out campaigning for the party over the next few weeks bt if you are I hope you are a bit more cheerful than you seem to be when writing on this blog.

[James Hellyer]

that's not what I meant James and I think you know it.

It's what you appeared to say...

My point was that you and others have a visceral dislike of the current leadership of the party and so anything it does is automatically beyond the pale.

That's untrue. Where I differ with the party leadership it's actually for well thought out reasons, rather than some kneejerk reaction.

It's stange that your point was apparently about myself and others and not the remuneration of the party's paid workers...

think it's a pity that you quote that bit of my answer back to me with a snide comment rather commenting on the clear message that paying people 12 times the national average salary means they need to produce extremely good results.

That "snide comment" was making the point that the measures you suggested were attributing rather more to Hilton's ability and influence than can actually be the case.

I don't know if you'll be out campaigning for the party over the next few weeks bt if you are I hope you are a bit more cheerful than you seem to be when writing on this blog.

If the local party actually ran its District Council candidates as Conservatives, then I might feel more inclined to campaign for them.

But anyway, thank you for the charming ad hominem comments.

[Jack Nevinson]

Mark: it's certainly not his market value if he's doing the job part-time, right? Just to be absolutely clear: last year he earned £276,000, including salary and dividends, at Good Business. Now he earns £276,000 for working for DC part-time, AND he gets to work at Good Business. (And, from the Nike & Sky plugs given by DC, it looks as if Good Business will continue to thrive.)

Why do you work so hard to justify what is obviously malodourous?

[kingbongo]

But anyway, thank you for the charming ad hominem comments.

and thank you for your continued contributions which I usually don't find myself in agreement with but which always warrant reading and I think you've made some good points about salaries and market worth (I presume ad hominem praise is OK or does that break the debating society rules?).

It's stange that your point was apparently about myself and others and not the remuneration of the party's paid workers...

not sure what you mean here. I thought my point was that Hilton et al might possibly (just) be worth the money and I think the election results will be a good first test.

I made my point about your reaction because I can't think of one thing done by the party that you have posted a positive comment on - happy to be proved wrong.

[Old Hack]

I understand that the Board will shortly be putting forward proposals to increase the membership levy from £1.50 per head to £5 and to do away with the voluntary campaign subscriptions that replaced quota payments.

So to put Mr Hilton's fee another way, he's costing the party about £1 per member pa.

What will it cost to make him redundant if he falls from favour?

[buxtehude]

My wife just caught up with the papers and commented: "Do you think politics will ever get away from being about favours to friends?"

Obviously not. One just as to grin and bear it and get on with the cake sales or whatever.

But excuse me if, the next time I hear Cameron talk about how people have become cynical about politics and how he's going to change it, I think about part-time fat-cat Steve Hilton and cringe.

[Chad]

Ah, now it is all falling into place. No wonder Liam Fox wants the taxpayer to cough up more state funding to bankroll the Tories.

I wonder if Mr Hilton's salary will be mentioned tomorrow when the new funding plans are released?

Now, if it was funded by the party, that is an issue for the party, but when the party is heavily reliant on taxpayers money and is seeking to ask for even more, then I would expect that there will no doubt be a lot of questions about this sort of expenditure in the press.

I hope the Taxpayers' Alliance is making a note of this. (great full pager in the NotW today though TPA - well done)

[buxtehude]

Bang-on, Chad. No donor is going to want to underwrite this kind of slush-fund, so it will have to come from the tax-payer, hence why the Tories don't want tax cuts anymore.

That's half a joke, but only half: the Tory party has become another big-state party. It is quite incapable of even comprehending the idea of value-for-money for either taxpayers or for donations.

[Chad]

The TPA is standing up for the taxpayer, which unfortunately the CamCons seem too embarassed to do, instead pursuing this increased state agenda.

I've just bought the Bumper Book of Government Waste and hope that the funding of opposition parties will be in the next edition.

[James Hellyer]

(I presume ad hominem praise is OK or does that break the debating society rules?)

Nah. That's allowed ;-)

[James Hellyer]

I made my point about your reaction because I can't think of one thing done by the party that you have posted a positive comment on - happy to be proved wrong.

A commitment not to cut and run from Iraq, and Davis's reaction to the cartoon crisis? When the rest do something praiseworthy, then I'll praise it.

[James Hellyer]

But excuse me if, the next time I hear Cameron talk about how people have become cynical about politics and how he's going to change it, I think about part-time fat-cat Steve Hilton and cringe.

What makes it look even worse is that Hilton is a friend of Cameron's and was - I believe - on his leadership campaign team. It just looks like a well paid job for the boys, nepotism in high places, etc.

[Rebel]

Welll at least we've lifted Mr Hilton out of poverty! It's undoubtedly part of the social justice agenda.

[Daniel Vince-Archer]

"So to put Mr Hilton's fee another way, he's costing the party about £1 per member pa."

And to put it another way, it's around 7% of the money we're taking from Johnny Taxpayer every year.

Yet another reason for increased state funding of political parties to be ruled out.