Waste Not Want Not
by Quinn
Last week the TaxPayers’ Alliance announced its “Public Sector Rich List”, a roll call of the highest earning workers employed in the state sector. In announcing the list they stated that
Taxpayers will be shocked at the scale of these massive pay awards. Large numbers of people in the public sector are effectively being paid City salaries. It is not surprising that taxes keep going up when the salaries for the public sector’s top executives keep rocketing.
For me the two standout statistics from the report are that the average salary of these government fat-cats, including bonuses, is £259,701 per annum, and that on average they have enjoyed a pay rise of 8.4% over the previous year, compared with a 4.2% rise in the economy as a whole. The full list can be viewed here (pdf).
Look a bit deeper, however (and not very deep at that) and I begin to doubt the point of this list, other than to play to the gallery. In the first place the TaxPayers’ Alliance has chosen to feature only those earning over £150,000 a year. Now, my maths is pretty shaky, but even I know that this means that the average pay of the people on the list is therefore going to be over £150,000 per annum. If you cherry pick the stats in such a way it isn’t that surprising that the overall average wage is going to be as high as it is.
So how many people make up this sample; how many out of the millions employed in the public sector are earning such extravagant figures? Well according to the report the grand total is a whopping 170 people. Are you shocked at that figure? I am; shocked that it is so small. I may be going out on a limb here, but can I suggest that the only reason the TaxPayers’ Alliance are so shocked – and feel that this figure can be considered high – is because they have a mordant hatred of the public sector for its own sake?
As a fair comparison you could ask how many people in the private sector earn a comparative figure? The answer, I think, would be “a lot”, certainly more than 170; only the other week it was announced that 4000 city workers have this year earned £1m in bonuses alone. Now, if I were to criticise such city bonuses there is every chance that I would be accused of the politics of envy; that I don’t is because quite frankly I have only the vaguest idea of the pressures and problems associated with such professions. Is it really any different to criticise high earners in other sectors of the economy?
For the TaxPayers’ Alliance it seems people in the public sector simply shouldn’t be awarded such sums. But why not? How much should they earn? Presumably just less. One argument often voiced is that the public sector doesn’t face the same scrutiny from shareholders that private companies do; but this assumes private companies are listed on the stock market in the first place, which in these boom times for private equity is less likely than ever. Private companies, of course, can go bankrupt, a pressure theoretically absent from the public sector; but does that mean that an equivalent job in the public sector gets an entirely free ride?
Let’s take television as an example. You could argue that the chairman of ITV faces far greater pressures than does the director general of the BBC thanks to the existence of his shareholders; but for one thing to make up for this the chairman of ITV already does earn more money than the loaded BBC chief (source), and for another you could plausibly argue that at the BBC that lack of shareholder power is more than made up for in the form of the far greater political pressure and scrutiny the corporation faces. Other broadcasters of course have different problems again; if you are the head of BSkyB your pay still dwarfs that of your BBC equivalent but your main concern is to keep your old dad happy. For me, though, the inclusion of Channel Four executives on the rich list seems particularly odd; while being nominally government-owned the channel is not publicly funded and has to compete for advertising revenue like most other broadcasters.
Certainly some of the pay awards listed seem pretty large – I will leave it to London’s public transport users to decide whether the £1m+ paid for Bob Kiley’s services amounts to value for money – but as with the city workers I mentioned earlier, I find it difficult to say they aren’t justified without knowing fully what such jobs entail; certainly let’s say that I think running London transport could be quite taxing, and that it is a big job with or without shareholder pressure. The argument for paying such high wages is surely the same one a private sector company would make – that you have to pay these wages to attract the top talent – and public sector organisations often have to compete with private sector firms for the same managers, with the salary (in theory) set in the the same marketplace. You can disagree with this principle, you can argue against high executive pay, but why just in the public sector? You can point out where the public sector fails in comparison with the private sector, but can you really criticise it when all it is doing is aping the private sector? And if you think some of these positions are overpaid best not seek to privatise them, as history suggests that their compensation payments will shoot up even higher as a consequence.
Now, if you are still with me, then I know what you are thinking; here he goes again, he works in the public sector himself so he is bound to defend it. But why should I? I pay my taxes too and I have no interest in my money being frittered away. I am pretty confident that if the public sector were reduced to its bare bones then my job would still exist, so I have no vested interest in any proliferation of non-jobs in and around where I work; if anything I should be more pissed off about them than anyone. While my colleagues and I are facing an enforced 2.2% pay rise I’m hardly eager to defend executive pay rises nearly 4 times that level.
But I’m not defending these levels of pay, I am just questioning their use as a criticism of the public sector itself. What irritates me here is the blinkered and biased nature of the debate. What especially grieves me is that I do think the TaxPayers’ Alliance has a valuable role to play. I agree that the public sector it spending our money, that these executives are our employees and they should be answerable to us. When the TA argue that the public sector should face greater scrutiny and accountability I wholeheartedly concur; when they attack some of my own bete-noires such as the cosy, meaningless quangos and the huge sums wasted on management consultants I couldn’t agree more. However, in apparently objecting to anyone in the public sector earning over £150,000, and to get worked up about even 170 public sector staff receiving such a salary, this report seems motivated purely by spite and disdain, as part of a one sided argument the sees the public sector as only ever bad. It detracts from the very justified points the TA may make, in the same way that the occasional valid criticism one reads on Biased BBC loses its weight because that blog is such a bolthole for Islamophobic fuckwits.
Along these lines I was less than impressed with the TaxPayers’ Alliance’s spokesman Blair Gibbs when he appeared on Victoria Derbyshire’s show on Radio 5 last week. Quite apart from stating that people in the public sector should earn less than their private sector counterparts, and then admitting that many executives had moved into the public sector for “public service” reasons when they could have earned more had they stayed put in the private sector (to which I thought “so what’s your problem, do you just want them to earn even less again”) he then went on to criticise people on the rich list who “we had never heard of in organisations we had never heard of”. As an example of one of these mysterious quangos they had “uncovered” he cited British Waterways, and sneered that all they do is to manage Britain’s canals of which “there are hardly any anymore”; a statement that on a number of levels betrays a quite astonishing level of ignorance.
But I haven’t given up on the Taxpayers Alliance just yet; I will give them one last go. The other day I picked up their Bumper Book of Government Waste. I brief flick through its pages does show up some bizarre examples of the sort of profligacy and empire building you feel would be difficult to get away with in the private sector; on the other hand there appears much that seems endemic to any bureaucracy or large organisation, or which wouldn’t be seen as waste in the private sector, but would for example be seen rather as a mark of a caring and generous employer that enjoyed good staff relations. It is interesting to note that according to the authors’ biographies they themselves have no experience of working in the private sector (that is if you don’t count think tanks, which of course I don’t); as such, unlike me, they have nothing against which to compare their public sector experiences. But we’ll see where the book takes me, and I may report back in time. I can’t help finding it ironic, though, that I picked up a book complaining about waste in a bookshop’s remaindered bin.
The Obscurer 
I notice from one of the Amazon reviews of the ‘Bumper Book’ that one of their targets is Public Sector Pensions. They seem to be peddling the same old myths and ignoring the fact that pensions are a contract between employer and employee. I think you are probably right – their objection is not to what goes on in government but to government itself. Which is not to say that government is perfect – it isn’t, but I have seen nothing in the last 35 years to suggest that it is particularly worse than anywhere else. I reserve my own venom for the insurance industry…
Thanks Ian.When it comes to pensions, I think all schemes have to be realistic and adjust to circumstances; many final salary private sector pensions have been wound up or closed to new members, and I don’t think public sector pensions should be immune from such economic realities.That said, often the argument put forward for reducing and reforming public sector pensions is merely because they tend to be more generous than those in the private sector; in effect public sector employees should receive what amounts to a pay cut, not for economic reasons, but because in that one part of their terms and conditions they happen to be better off than many private sector workers. Why? That could mean a school dinner lady having a reduced pension simply because it has better conditions than the private pension of a chartered accountant.I don’t think that argument is sustainable, really.
when considering the rights and wrongs of taxing the large financial bonuses paid out to people of the city of London one must understand why the City of London is so profitable. This stems back to the need to run an empire. Back then we needed to send one person to India to run some large area on his own. It was absolutely essential that this person was honest and had integrity. For over one hundred years the top schools such as Eton and more recently places such as Gordonstoun, instilled in the young ones cleve psychological rewards for being honest and telling the truth. I remember myself lying and the Master of Gordonstoun asking me to walk to the town of Elgin but “nobody will check on you”, such that I could have stayed in my dormitory and not done it. These psychological sorts of punishments had the effect of instilling honesty in the children. Over 100 years, the lower classes copied the upper classes, so that the only dishonesty we hear about in low classes is the small “fiddle” which pales in comparison to the dishonesty in places such as latin america. Britain is perhaps the only place in the world where you take your change in the shop and do not count it. It turns out that anyone with money anywhere in the world wants to put the money in London, as this place is safe. Consider that the Swiss government cheated the jews out of their money, and more recently (in the 1980s) a large German bank borrowed large sums overnight and declared itself bankrupt in the morning, something no English bank has ever done or ever will do. In our society there is trust and hardly any checking of any sort. In summary, the success of the City is due entirely to the culture of the British people, and the money flows everyday for that reason. These traders, bankers and lawyers simply benefit from this, the money comes into their pockets as commission. Surely, nobody in their right mind will think that the bonuses are actually earned!!? For this reason, these bonueses and profits should be heavily taxed by Gordon Brownn. The Chineses and others are listing their companies in London for this reason of the honesty of the British culture and nothing else. Surely nobody could imagine that these ignorant traders and bankers and lawyers have any knwoledge? Can any of these accountants compare with the engineers and scientists who run silicon valley? of course not. They know nothing but they just happen to have their mouths on this open tap of money that pours into the City and take their 1% commission of it. If more flows in then they make more without any effort.