Senior public sector pay

Yes Minister in the Prime Minister's offices at 10 Downing Street

The first ever cabinet secretary, Maurice Hankey, totally transformed the way that British government worked during the dark days of WW1. His work and skills made winning the war possible and saved large numbers of lives, possibly even millions. So when the war was over he received a bonus equivalent to a million pounds in today’s money and as this was well before the evils of socialism he will have paid very little tax on it. This reward was well deserved and nobody can decry his receiving it.

In 2007 in Singapore the lowest level of senior civil servant (many in their early 30s) received SGD 372,000 to SGD 384,000, senior Permanent Secretaries received SGD 1.6 million (there are around 2 SGDs to the £). And because Singapore didn’t suffer from socialism their highest income tax rate is just 20%. But 25% of these civil servants’ salary is tied to GDP growth, so in 2009 they had a 19% wage reduction. Then as the Singapore economy expanded very sharply last year they received a bonus of two months’ salary. But these guys are worth it, they govern Singapore so well that their GDP per capita in PPP (purchasing power parity) is $US 57,238 whilst in the UK it is $US 35,053 (figures IMF 2010). So when you factor in the 20% maximum income tax you can see that the average Singaporean is more than twice as well off as the average Brit.

And remember that Singapore built to this position from nearly nothing and without the benefit of any natural resources, such as North Sea oil. Whereas Britain was once the richest country on earth and has gone steadily downhill due to the actions of the inept Labour governments we have been burdened with and the useless civil servants who have administered us.

So how well should civil servants be paid? On average they already get paid more than private sector workers and they do far less work for it. Plus they get fantastic pensions. But at the senior level private sector managers get paid far, far more than civil servants. And so they should, any talk of parity at this level is faintly ridiculous.

The thing about senior private sector managers is that they have to generate wealth, they have to compete profitably in the market or they lose their jobs, they have to give their investors a return and they have to take considered risks in order to do so. A good CEO in a FTSE 100 company can make billions of pounds of difference to the earnings of his company each year, that he gets paid a few million for doing so looks like pretty good value. In comparison all a civil servant does is spend money. And £300,000 salary for a UK local government officer is outrageous on current performance levels.

What we should do with senior civil servants is tie say 50% of their salaries to a few key economic indicators. If they got rewarded for decreasing the percentage of the economy in the public sector then they would be paid for not being so profligate with our money, this would be excellent. Then if they were also rewarded for GDP growth they would be enthusiastic to implement policies that made us all richer. This makes very great sense indeed. As long as they only get the bonuses if the figures are actually achieved.

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