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These fat cats deserve outing, even by hypocrites

These fat cats deserve outing, even by hypocrites

🕔11.Nov 2015

Chris Game, from the University of Birmingham, tackles the thorny issue of pay in the public sector. Warning: his post contains some praise for both the Daily Mail and Birmingham City Council. Now, this is something you won’t read every day on the Chamberlain Files

I know the King James Bible is a towering achievement of English literature, beautiful, scholarly, etc., but there are still bits that can be improved upon. Like the beam and mote business in Matthew’s gospel.

KJ’s translation starts pleasingly aggressive, but tails off through the clumsy and nowadays confusing language: “Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother’s eye.” I mean, can’t the guy just stop beaming? Besides, how big are these things? Are beams bigger than motes, and, if so, how much bigger?

So give me the modern versions, where the hypocrites cast out planks or logs before turning to their friends’ specks. They more than make up in comprehensibility anything lost in Jacobean linguistic elegance.

Talking of which brings us, of course, to the Daily Mail, which throughout this week is highlighting public sector motes by the shed-load, while conspicuously failing to check the shaving mirror for its own planks.

I refer, in case you haven’t caught it yet, to the paper’s comprehensive and fearless investigation, together with the TaxPayers’ Alliance (TPA), into public sector ‘fat cat’ pay abuses.

So what’s new? Well, put like that, nothing – except perhaps the fact that we’re currently in the middle of a decade of continuous public spending cuts, an 8-year public sector pay freeze, and with a supposedly protected NHS in its own financial crisis.

Which means that, while this latest DM/TPA herd of bloated felines may be little different from their predecessors and their monetary avarice probably no greater, the desperate world in which that avarice is nowadays being pursued does – for me, anyway – make it that much sadder and more sickeningly repugnant.

Two cheers at least, then, for the DM/TPA for making the most of the Freedom of Information (FoI) Act while they can – before, ironically, public sector-detesting ministers start significantly curbing its powers – to produce “the most detailed audit of state earnings ever”. Nauseating as much of it is, this ordure is, in all senses, of public interest.

There’s the NHS boss who earned £845,000 a year, but still claimed a £1.40 bus ride on expenses; the police chief earning £737,000 while his force was laying off staff by the hundred; the hospital trust CE with a £1.26 million pay package; the Welsh council CE who claimed £2,368 a month to drive his Porsche to work, and subsequently left the council “in disgrace” – and with a punishing £277,000 pay off. And many, many more.

Understandably, as with the greedy MPs a few years ago, it’s these individual cases that provide the headlines and pictures – their mansions and holiday homes, polished Porsches, and smug fat cat grins – but the underlying system and technical details that are actually the more important.

How widespread, for instance, remains the practice of councils paying senior officers ‘off the books’ or through an agency – a tax avoidance scam now supposedly prohibited to public bodies? Who decides it’s a ‘best value’ benefit for council tax payers to cough up for already well remunerated officers’ private health insurance, and for ‘compensation’, should they, heaven forfend, have to ‘go NHS’?

The DM/TPA exposé covers a broad spread of the public sector – local authorities, hospitals, police and fire services, schools and universities. This blog post, though, will now confine itself to local government and Birmingham City Council in particular.

In addition to all the feculence (nice word, eh? – like flatulence, but without its charm!), the DM/TPA also provide  a daily online ‘Search the Rich List’ toy, Monday’s enabling you to discover, for your own council area, the number of six-figure public sector earners, plus salaries and, unless they’re withheld, identities of the fattest cats.

Birmingham, at the time of the FoI inquiry, had 66, with 5 earning over £200,000 – headed not by the then CE, Stephen Hughes, but by the Strategic Directors for Children, Young People & Families, and Development & Culture, both on over £300,000. Manchester, by comparison, had 27, Sandwell 28, Leeds 38, and Essex 71.

That highest earning Strategic Director’s pay was £382,392 – or nearly 30 times the then minimum wage (£6.31 per hour or £13,124 p.a.) and 25 times the Living Wage, which the Council wasn’t then paying.

These multiples are important because the measurement, discussion and required publication of pay ratios – the gap between an organisation’s highest earner(s) and either the lowest or median (midpoint) earners – is increasingly acknowledged as one of the most promising ways of reversing the economically and socially damaging trend that has led to our becoming, in wages and income distribution, the most unequal country in the EU.

The Conservative-led Coalition’s unsubtle approach to this economy-wide problem was to ignore the massively greater multiples in the private sector, and commission the economic journalist Will Hutton to undertake a ‘Fair Pay Review’, and consider the case for capping public sector managers’ pay at 20 times that of their organisation’s lowest paid employee.

Hutton delivered an excellent report, but no pay cap, which he argued would be unfair on both individuals and organisations and contribute little to greater equality. More effective would be for public service organisations to track, publish and explain their pay multiples over time, using the ratio between top executive pay and the median, rather than the lowest paid.

Which is almost precisely what Birmingham City Council now does in its annual Pay Policy Statement, most recently for 2015/16. It sets out the methods by which salaries of all employees are determined, details of the remuneration of the most senior officers and of the lowest paid employees, and the ratio between the two.

It seems as transparent as even the TPA could wish a public organisation to be, one effect of which is to show how some data gathered in the DM/TPA FoI trawl are inevitably already out of date.

The CE, Mark Rogers, now heads Birmingham’s pay pyramid, on a salary scale rising to £220,000, but currently, according to the Pay Policy Statement, on £182,500. The Strategic Director (People), responsible for both Children and Adult services, is on a scale with a maximum of £153,483, and no other officer is on a higher scale.

Clearly – though hardly commendably, as anything else in the circumstances would be shocking – Birmingham has significantly revised and reduced its top salary structure over the past couple of years, and there have been changes at the other end too.

Birmingham was in the vanguard of local authorities choosing to pay the UK Living Wage, long before the Chancellor produced his nearly 10% lower ‘National Living Wage’, which will start at £7.20 an hour from next April. The council’s lowest earning employees are therefore currently paid £7.85 an hour, equivalent to £14,940 p.a.

Which returns us to ratios and multiples. What two years ago was a nearly 30 to 1 ratio between Birmingham’s highest and lowest paid employees is now, as the council itself notes, 12.2 to 1. And, using the Hutton Review’s preferred measure, the ratio between the CE’s salary and the median full-time officer’s earnings (£21,530) is 8.4 to 1.

All this and more is on the Council’s website, and “in additional formats by request”, which, returning to our starting point, isn’t quite how Daily Mail & General Trust International operates.

We know, thanks for example to the Guardian, that the Mail’s Editor-in-Chief, Paul Dacre, had a ‘pay and bonus package’ of £2.41 million in 2014 – a surely deserved 25% up on 2013’s patently parsimonious package.

And we know, thanks to the Living Wage Foundation, that it “isn’t a Living Wage employer yet”. I love that “yet”, suggesting that senior executives might at this moment be seated around a boardroom table seriously considering it, rather than, judging from the paper’s own pages, opposing the very principle.

So, assuming the Mail pays at least the National Minimum Wage of £6.70 an hour, or just under £14,000 p.a., we have a highest-lowest pay ratio of just the 173 to 1 – which sounds grotesque, until you realise that it’s less unequal than the average FTSE company whose CEOs now receive at least 130 times not their lowest, but their average, paid employee.

Now that really is a sizable beam, plank, log or whatever through which to view your brother’s shortcomings.

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