Sunday, November 11, 2007

Public Sector Rich List 2007

The TaxPayers' Alliance has just published the Public Sector Rich List 2007, listing exactly what we're paying the state's 300 top earners. It is an excellent, painstaking, and teeth-grinding analysis that Tyler warmly commends to you (see also the extensive Sunday Times coverage, where it made the front page and the lead editorial).

Key points:
  • The average total remuneration of the 300 people on the list is £237,564 per annum. This works out at over £4,500 a week. Although many people on the list are likely to work longer, based on a 35-hour week, this is equal to almost £130 an hour, or around £2.15 a minute.

  • There is 1 person in the public sector – Adam Crozier, Royal Mail Chief Executive – who earns more than £1 million a year.

  • There are 17 people in the public sector earning above £500,000 a year.
    There are at least 66 people earning above £250,000 a year (recent media reports suggest that some GPs are in this category).

  • The 300 people had an average pay rise of 12.8 per cent between 2005-06 and 2006-07. This is three times average earnings growth (including bonuses) across the country, which fluctuates around 4 per cent and over six times the current 2 per cent government target for growth in pay for ordinary public sector workers.

Now there are those who ask so what? We need to pay these people much more than in the past because in today's globalised labour market it's the going rate. If we don't pay top dollar we'll end up with monkeys running our public services.

The trouble is, there's virtually no evidence such a strategy works.

For one thing, many of these higher salaries are going to public sector bosses who were already in place before pay got ramped (cf the huge windfalls showered on Cedric the Pig style incumbent managers when the utilities first got privatised).

Moreover, this government has appointed a succession of expensive, high-rolling, supposed heavy hitters from the private sector who have spectacularly failed to perform once in the public sector. Recent examples include the husky-killer brought in to deliver the NHS Supercomputer (eg see this blog), and a whole string of expensive finance guys recruited to run the Financial Services Authority- the quango that totally failed to stay on top of Northern Rock (eg see this blog).

In reality, the delivery problems of the public sector go way deeper than not having the right guys at the top. They're a reflection of culture, political control, and most fundamentally, the complete absence of a meaningful customer-supplier relationship. Because the public services answer to politicians, not to customers, they have to do whatever the politicians dream up- not what works.

And the public sector has an atrocious record of rewarding failure. The TPA has produced this name and shame list of ten current high profile cases:

Of course, we all know of failed private sector CEOs who get sent on their way with multi-million payoffs. But they do at least get hoofed out- the shareholders insist on it (eg the recent blood letting at Citibank and Merrill Lynch). In the public sector, more often than not underperformers remain in post- or simply get shifted sideways (like Sir John Gieve). In the TPA table, only one- Rose Gibb at Maidstone- has actually been removed.

PS It's quite possible the TPA list has missed some of the public sector's top earners. As always, the government makes sure it's difficult to track down the information.

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