The sheer effrontery of right wing attacks on local government pay

by Andy Dodd

Last week, the institute of directors released a report claiming that the country’s debt position could be greatly improved by “progressive” measures such as abolishing the right to flexible working hours, eliminating time off for training and removing the right to a free hearing at an employment tribunal.

And now a strange study, from the independent incomes data services, bowls another full toss for the right wing to hit into the orbit of planet loony. It cites senior executives in local government who earn more than the prime minister. Predictably enough, by teatime, the forums on the Daily Telegraph web site were loaded with comments about “fake CEOs” who “take no risks” and are paid “vast sums”.

Without constructing a blanket defence for all local authority chief execs, some of whom may well be overpaid, it is a little confused to take the PM’s salary and argue that this should be the arbiter for senior management pay in the public sector. And, given the challenges currently facing senior managers in inner city local government, to say that they take no risks and are fake is absurd.

First, you could argue that the PM should not be paid a formal salary because the role is as much symbolic as it is vocational. And much of what would be ordinary household expenditure for a regular citizen does not apply to them. We are yet to see anyone walk away from Downing Street in penury.

Second, as Grant Shapps, the local government minister, was forced to admit on R5 Live, some of the permanent private secretaries (i.e. job-for-life civil servants who don’t have to worry about cut-backs like those affecting their unfortunate cousins in local government land) are also earning more than David Cameron. Needless to say, in many cases, these mandarins will have achieved their station via the same public school and Oxbridge route favoured by members of the government front bench. All in it together? You bet.

Third, the Tory plan is to transfer many of the services currently being run by local authorities to the private sector, in order to cut back scandalous levels of public spending. And we know full well that many of these private companies – compass, serco, capita etc – pay CEO packages significantly higher than those deemed suitable for public sector managers. Even more than the most lavishly rewarded CEOs, such as Andrea Hill of Tory-run Suffolk county council. Mrs Hill takes home £220,000. But she is a model of restraint compared to Messrs Richard Cousins of compass (£910k), Chris Hyman of serco (over £1.5M) and Paul Pindar of capita (£750k). Don’t expect any insightful research into private sector pay when all of your local services have been stripped to the bone and your council tax is going straight into the coffers of some gigantic corporation that is running school dinners and road maintenance on a pure profit basis.

Fourth, so what if the leader of a large, diverse and challenging local authority is earning more than David Cameron? Maybe that kind of salary is necessary to get the calibre of individual who is capable of meeting the demands of such a stressful and crucial position. Maybe this is what happens when you allow salaries to be determined “by the market”, which is something that the institute of directors would surely support.

If you set artificial limits, you may well end up with insufficiently qualified people to run our councils and local authorities. Which would make them poorly managed, inefficient and in need of being replaced by (you’ve guessed it) private sector companies, which naturally do things much better in the eyes of Telegraph readers. Perish the thought that there could be a hidden agenda to all of this.

Finally – and yes, it is a bit of a cliché, and the PM has now officially declared the war on banking over – but it is pure comedy for those on the right to lambast the lack of pay restraint in local government. Just at the time when bank bosses and their lieutenants prepare to pay themselves millions upon millions of pounds in bonuses, complete with the chancellor’s seal of approval.

The fact is, as the same IDS survey points out, that senior management pay in the public sector increased by just 2% last year. Have you ever seen such naked greed and self-reward? For that, look no further than the boardrooms of FTSE-100 companies, where another IDS study, published last October, showed salaries increasing by 55% in the same period. Lots of restraint there then. Just because these companies are run for profit doesn’t exempt them from similar scrutiny to their public sector counterparts, when clearly all this bunce is being withheld from ordinary workers who see nothing like these kinds of increases to their own pay.

There is a concerted assault on reason and truth that is being made on our country’s future. It is vital that we do not allow nonsense like this to become conventional wisdom.

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8 Responses to “The sheer effrontery of right wing attacks on local government pay”

  1. Robin Thorpe says:

    Couldn’t agree more. The PM’s pay is kept artificially low to avoid political embarrassment, which the media and MPs know full well, and as such is an extremely poor reference.

  2. Ed says:

    On your third point… Ultimately what difference does it make what private companies pay their top level managers if they are providing services that are of equal quality to the ones provided by the council, but at a lower cost to the tax payer?

  3. Jon says:

    Ed – how can they? They are out for profit so have to cut something to generate one…ie..the level of service they provide. Efficient capitalism is a myth in this arena. All we will be doing is paying our taxes into provide hands. It’s a zero sum game. And before the competition argument is fielded. There never is. It will not cost tax payers less.

  4. Ed says:

    Jon that would be true, but only if the public sector is providing the service in the most effective and cost efficient manner.

  5. Tacitus says:

    While opposed to anything smelling of Tory, I would urge slight caution here. Ther can be little justice for anyone earning £200,000+ a year whilst a single person picks up £50+ a week JSA.

    One of the old ideals of Labour was the redistribution of wealth. Have we moved so far from this ideal that now we want to protect the well paid?

  6. Edward Carlsson Browne says:

    I couldn’t disagree more. You can lower wages across the board, as local government managers are primarily qualified to work in local government. That limits their market and I’m not convinced that pay restraint is causing us to miss out on a cornucopia of talented public servants right now.

    Some are good, some aren’t – just as is always the case in local government. None of them should be paid £150,000 a year.

  7. John says:

    Can you answer me one thing? In my Lib Dem local authority where it has had half the rate support grant of a neighbouring local authority with 7m reserves front-line services like libraries are being protected with regrettably 3-400 posts lost through voluntary redundancies.

    In the Labour authority down the road, where the leader has a chauffeur driven car, the Chief Exec earns a quarter of a million, there are 100m of reserves, libraries are being slashed, toilets closed and thousands of posts lost.


  8. Andrew Dodd says:

    I was quite careful to say that I wasn’t conducting a blanket defence of every chief executive’s pay in local government. I do think one can make a distinction between frivolous excessive use of public funds, such as those frequently featured in Private Eye’s ‘Rotten Boroughs’ and a discussion surrounding the legitimacy of managerial pay in the public sector.

    I still stick to my chief point which is that the PM’s salary is irrelevant as a barometer of what senior managers should earn in local government. I don’t want those executives to be paid inappropriate sums but equally, I think that running a large metropolitan authority is not a job that just anyone can do. It may be a public funded post but it’s still a job that requires high calibre individuals with the talent to manage large, complex organisations and to some extent, market rates have to apply otherwise you would never get good people in those posts. If £150,000 is what it takes to get the right people in those positions, then so be it. If it’s £75,000, the same. Paying artificially low salaries on point of principle for someone underqualified to preside over a shambles would be in nobody’s best interest. I don’t see how Conservatives can defend ‘market rates’ for investment bankers who might flee Britain if we taxed them fairly but scream ‘foul’ when the same ‘it’s the market’ notion is applied to local government salaries at the top end.

    I also don’t follow the logic that the best way to run public services is to hand them over to ‘for profit’ companies where senior managers can, and do, earn ten times more than their public sector counterparts without improving performance or efficiency by anything like the same degree. Time and time again we see privatisation result in reduction of choice, entitlement and availability, with the core savings transferred not to improvement or better delivery, but simply passed to the bottom line – for which chief executives benefit handsomely if the IOD figures are to be believed. Needless to say, in this scenario, once a private company is running the show, the workers in front line services still get paid the same amount, even though their boss’s salary has gone up from £200k (or whatever) to closer to £1 Million. I don’t think that’s any more tolerable than local government chiefs being paid too much.

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