Public sector leaders have no more right to big pay increases than teachers,
nurses or firefighters
Next to those stout and shameless beasts in the private sector, they are not
even tubby kittens, yet listening to the bosses of hospitals, councils and quangoes
justify their swaggering pay increases is nevertheless an anthropological
The cry of council chiefs is plaintive and sly. Look at the top dog of
Blockbuster Video, they say – £416,000 a year without the burden of having to
shut a care home or risk being lynched in the street by furious tenants.
The highest paid job in local government is at Bradford Metropolitan
District Council on up to £200,000. Ergo, municipal bosses need to catch up.
Many council top pay bands jumped £20,000 in 2002; the upper limit at Kent
County Council and the London Borough of Wandsworth recently nudged ahead of
the Prime Minister’s salary of £177,000.
Spotting a government quango head in full flow is rarer. While disclosure
requirements are tighter than for local authorities (but still lax by private
sector standards), the quango chief is, by nature, a secretive creature. Some
use the Data Protection Act (DPA) to avoid telling taxpayers how much they
earn. IDS, the pay specialist, reckons their average pay rose by 9.4 per cent
to March 2002 (inflation is 3 per cent).
Healing the sick is, of course, priceless. But is managing the healers of
the sick the kind of job that needed a pay rise of 20 per cent in 2002 for a
quarter of hospital chief executives and 10 per cent for half? Contrast that
with the ‘generous’ offer to firefighters of 16 per cent over two and a half
years. As with quangoes, many camouflage themselves with the DPA. Yet just
occasionally they let slip with a giddy chirrup of exculpatory babble that goes
like this: complexity, responsibility, talent, motivation, scrutiny, audits,
targets, and – loudest of all – still no comparison with the private sector.
There is one excellent argument here in a jungle of bad ones: the leaders of
public sector organisations do indeed have complicated and responsible jobs on
which millions depend. Reward should reflect the seriousness of the undertaking
– as, by and large, it already does.
But we then need to stalk and maul the two fallacies on which all the other
bad arguments depend. The first, is that leaders are different from other
deserving, undervalued public servants. The second, is that public sector chief
executives operate in the same labour market as private sector leaders, and
should thus seek to mimic their movements in pay.
I cannot see any reason why public sector leaders are entitled to special
pleading. There are shortages of teachers, social services professionals,
environmental health officers, nurses, radiographers, planners, lawyers, and
dozens of others. The Government has made available some short-term cash to
ease recruitment problems, but has stuck firm to its line that there should be
no more pay without performance improvements.
Leaders should be no exception. The whole ethos of the public sector depends
partly on considerations of fairness playing a significant role in reward. Many
untidy compromises are necessary to preserve this sense of fairness – but
inflating differentials at the top is tantamount to a declaration of war upon
Next, it is time the tactical comparison game was exposed for the
deliciously flexible ruse it is. Just as British corporate executives seek to
be levelled up to American levels of compensation rather than levelled down to
European levels, public sector bosses have realised that pretending they share
‘a market’ with private sector chief executives might provide ammunition in
their quest for more money.
Yet just because you can earn more at Blockbuster Video than Bradford MBC is
not a justification for raising the pay of the latter. The dottiness/dopeyness
of shareholders is not a reason for taxpayers to ape them.
It may be the Government’s aim to encourage more interchange of leaders
between the public and private sectors, but the fact is that this remains
SOLACE, the local government chief executive’s club, is unable to recall an
incidence of a single member from a commercial background. The NHS
Confederation can think of just two hospital bosses. The senior civil service
is the only part of the public sector where cross-fertilisation of leaders is a
reality – a fifth of appointments in 2002 came from the private sector. But
then pay at the top of the civil service was always very high, anyway. Why
increase it so fast?
According to Laurance Jackson, director of the headhunter Tribal GWT, the
reason so few make the transition is experience. "Unless you’ve worked in
local government, the chances of you having the cultural know-how or the
political astuteness to lead such a complex organisation are remote," he
says. Reward is not the barrier; background is. Therefore, why maintain the
fiction that there is one universal market for ‘talented’ executives?
Over the past 25 years, the private sector has been characterised by the
growing proportion of corporate earnings that have been diverted into the
trousers of senior managers and accelerating differentials between top and
average earners. Do we really want this to happen with the fruits of taxation?
Remember: we only believe that the pharaohs built the pyramids because
no-one ever asked the slaves. Good leadership of public services is important,
but collective endeavour is infinitely more so.