Are We Nuts Overpaying Monkeys?

There has been considerable agitation by public service unions on both sides of the border that workers are being hit severely by Westminster’s austerity programme, whether by pay freeze/cut or benefit loss (especially pension) or even loss of their job entirely. In Scotland, tightened budgets have mostly led to natural job losses as people move on or retire. But that won’t last. And, given that worse is to come, the real question is how best to cope rather than shutting eyes tight in the face of reality.

But one area where tightening remains a foreign concept is in executive pay. The senior management teams (SMT) of councils (Heads of Service, Directors and Chief Executives) have had it pretty good. In 1976, the first pass of local government reorganisation had district councils led by Chief Executives earning 2-3 multiples of the median wage of £4,420 (even trained professionals earned under £8,000). Twenty years later, the present structure of single-tier councils saw SMT pay scales appropriate to regions retained when the median wage had risen over £15,000 and SMTs were led by CEOs with salaries 4-5 times that. (Actual and historical details are fiercely protected by SOLACE).

Recently, median level earnings in the public sector (£28,808 per per annum) has pulled ahead of the private sector (£24,596 per annum), following steady annual increases that the private sector has not seen since pre-2008. But, in the decade and a half since the present 32 councils were set up, it is SMT members who have done extraordinarily well. In steady boosts—such as Glasgow’s 9.2% jump in 2002—every council Chief Executive is now on at least £100,000, with Edinburgh’s new CEO landing £158,000 and Glasgow’s pushing £200k. Current strictures that apply to council staff, the private sector (or, indeed, the real world) don’t seem to apply here. And when you chip in that a council SMT consists of upwards of 15 senior staff on over £75k each, costing each council £1.5m or more, questions need to be asked.

Back in 2002, Sir Neil Macintosh’s review of senior salaries claimed  ”This review is necessary if councils are to continue to attract and retain the best calibre of chief officers by offering competitive salaries in comparison with other authorities and public sector bodies.” Since public sector bodies like SPT are paying £150k to their CEO, this seems like a rather self-serving, circular argument. And none can be claimed as performance-related. The local government bill to the Scottish public a decade ago was half what it is now. Can anyone highlight a council service that’s twice as good as it was ten years ago?

This fraught situation has its parallel in the private sector. Once, CEO’s there were paid a modest multiple of the workers’ wage, much as in the public sector. But look what happened once business growth and ambition combined into a heady mix:

These are astronomical figures, made worse by the fact that, since 1993 salaries were supposed to be geared to efficiency and/or sales growth. So, are our public servants modest by comparison? Do the public actually get a good deal? The answer has to be a firm ‘no’. Not only are councils famously top-heavy as operations but they have proved themselves unable to rationally streamline their operations, let alone exploit business opportunities and build customer loyalty through excellent service. What we need in our public sector apparently exists in the private, namely chief officers prepared to put their money where their mouth is and take performance-related rewards and only token base pay:

So, step up the first council CEO prepared to work for a £1 salary, plus some fraction of the efficiency savings and/or people motivation that they create personally. Their current annual haul is, surely, justified by that, isn’t it? …Hello?…

…Is anyone there?…

 

About davidsberry

Local councillor, tour guide and database designer. Keen on wildlife, history, boats and music. Stood for the Scottish Parliament 2011; lost by 151 votes.
This entry was posted in Commerce, Politics and tagged . Bookmark the permalink.

One Response to Are We Nuts Overpaying Monkeys?

  1. Pingback: They Also Serve | davidsberry

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