The spread of fat cats in the public sector

Published by The i Paper & The Independent (15th February, 2016)

Birmingham University was one of the losers in the last global ranking of the world’s finest higher education institutions, falling an unfortunate 12 places below the likes of Lund in Sweden and Holland’s Delft Institute of Technology. Perhaps more painfully, it ended up behind 14 other British universities, including local rivals Nottingham and Warwick. Yet its vice-chancellor – the seventh best paid in the country – saw his salary rise.

Sir David Eastwood, who has run the university for seven years, collects £416,000 a year, as well as enjoying the standard perks that go with such a job. No doubt it is challenging running a major centre of learning with 28,664 students from nearly 150 different nations. Yet is it really so much harder than running the country, given his pay packet is almost three times higher than the Prime Minister’s £142,500 salary? And is it right that this publicly-funded academic is deemed so precious he is worth the joint salary of 20 fellow Brummies, based on average earnings?

I do not mean to pick on Sir David, who has a long record of public service. At King’s College London, the new top man earns £42,000 more than Sir David, and £134,000 more than his predecessor. Salford spent more than half a million on vice chancellors’ pay. These hefty figures emerged in a study by the University and College Union, which found 23 university chiefs enjoying pay rises of 10 per cent or more last year. Their salaries increased almost three times faster than other university staff over the past five years – and many enjoy rent-free homes chucked in on top.

Clearly university chiefs are ignoring requests to curb greed. Two years ago Coalition ministers David Willetts and Vince Cable united to criticise them over pay, issuing a joint plea for restraint amid ‘stretched’ public finances. ‘We are very concerned about the substantial upward drift of salaries’ of some top management,’ they said. Yet these academics are far from alone. For they symbolise a wider problem: how the curse of excessive pay has infected the public sector.

Listen to their defences and you hear echoes of the pathetic excuses used in the private sector: the need to attract best candidates, the unique complexities of jobs, the supposed international comparisons. Never mind that fellow academics have cast doubt on modern myths of leadership and found excessive pay corrodes morale; others demonstrated how benchmarking against mean pay of peers leads to an automatic upwards earnings spiral.

But they should note the justified public fury over executives enriching themselves so obscenely at the expense of others. This is bad enough in the private sector, where chief executives of Britain’s biggest companies trouser 183 times the salaries of the average worker, a gap that has risen almost fourfold since 1998. Their earnings now average an astonishing £1,260 an hour; no wonder everyone from Boris Johnson to the Chartered Institute of Personnel and Development have voiced concerns. Yet such dodgy behaviour is even more grotesque when the fat cats are public servants who are partly reliant on taxes.

We can see it with council chiefs, earning massive amounts while slashing services for disabled people and pensioners. There are more than 150 people in town halls apparently more valuable than the Prime Minister, which is worth remembering when your local library closes. One boss took home £411,000 in a year. Or look at the poor old health service, creaking under unprecedented pressures. Yet one in five hospital trust directors were paid more than David Cameron, while an investigation by The Daily Mail and Taxpayers’ Alliance found the head of South Tees Hospital NHS Foundation Trust on a seven-figure package.

The same shabby phenomenon can be seen in the upper echelons of some police forces, for all those complaints of crime-fighting being threatened by cuts. Scottish taxpayers were found to be shelling out £1.37m to just two deputy chief constables, even as the force shed 800 jobs. And in schools, where one by-product of the academy programme driving up standards has been the hiring of head teachers on increasingly over-inflated packages. Latest figures revealed 1,230 on six-figure pay, almost twice the number from two years earlier; the highest earner was collecting an extraordinary £360,000 a year.

Education ministers have implored head teachers not to be too greedy; they are already among the highest earning school heads in Europe. But the Government will have to do more than mouth platitudes and plead about over-paying in the public sector. Just as all those pin-striped chaps helping themselves to ever-larger slices of corporate profits is corrosive to the cause of capitalism, so the self-enrichment of some university chiefs, head teachers and hospital bosses damages promotion of greater freedom within the public sector.

The same antics are apparent in the charity sector too, where even in the poverty industry some think it fine to beg for funds from the public while pocketing huge salaries. But there is no doubt seeing this in schools, hospitals, police forces and universities is especially damaging for those of us who believe state services benefit from market reforms and private sector efficiencies. Already, public faith in too many institutions meant to bind the nation together has been sorely tested. Sleazy self-enrichment at taxpayer expense, especially at a time of austerity, can only further undermine any sense of communal spirit.

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