1. Governance
February 28, 2018

“It’s a nonsense to attack public sector pay rates in isolation”: In defence of council fat cats

By Jonn Elledge

Those loveable, low-tax-loving, government-hating free market fundamentalist tykes the Taxpayers Alliance (*not affiliated with actual taxpayers) are at it again.

Earlier they tweeted out the 10th edition of the Town Hall Rich List, “the most comprehensive list of council employees in the UK whose total annual remuneration exceeds £100,000”. The report actually comes from last year – something which, I’ll level with you, I didn’t actually realise until I’d started writing. But it’s a good excuse for making an argument I’ve been thinking about for some time, so what the hell.

The Town Hall Rich List is a pretty easy win for pressure group like the TPA. To the first approximation, nobody likes the idea that their taxes are being used to pay people salaries they’ll never earn themselves, let alone for jobs they don’t even understand. What’s more, there are endless, copy-hungry local papers, plus an entire right wing-media with as great an ideological commitment to shrinking the state as the TPA itself does. Do the research, in other words, and the story is all but guaranteed to get picked up.

And it must be said that some of the pressure group’s findings are a little, well, gross. The report found that, in 2015-16, there were 2,314 council employees earning over £100,000 (89 up on the last year), and 539 earning more than £150,000 (53 up). The London borough of Southwark alone paid 44 different people over £100,000.

Best of all, Sunderland City Council manages to spend £1.7m on just three employees, although this included pension contributions: the chief executive (£625,570), the director of finance (£605,958) and the “executive director of people’s services”, who must be spitting blood because they only got paid £444,495. To put that number in context: the average house price in Sunderland is around £140,000.

So, yes: some of this stuff smells, rather, and hardly anyone out there is going to stick their neck out to argue that council employees should, sometimes, be paid six figure sums. Even though they work in the public sector. Even though they work for the council, of all places. What kind of weirdo is going to make that argument?


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Okay. Look. Not all of those salaries are defensible – the Sunderland ones, in particular, feel bloody ridiculous.

But there’s a sleight of hand in the TPA’s report. By juxtaposing those £600,000 salaries in the North East with the fact that a couple of thousand council employees earned more than £100,000, it’s trying to suggest that both those things are equally appalling, and I’m really not sure they are. My job doesn’t pay anything like £100,000 (though my DMs are open and I’m open to offers) – but I’m aware that there are an awful lot of jobs out there that do, especially in finance and management.

Are those people worth the money they are paid? I have absolutely no idea, but suspect that a lot of them don’t work longer or harder than, say, their cleaners. Nonetheless, this is what the market has decided to pay them.

If councils couldn’t also pay six figure salaries, what would happen? Well, for one thing, they’d struggle to recruit the sort of people who can earn six figures in the private sector. But that’s probably not the biggest problem, since most highly paid council staff, as I understand it, have climbed the ladder internally.

The bigger danger is that councils will lose senior staff to the sort of consulting and contracting firms they often find themselves working with – firms which aren’t shy about paying big salaries, and whose salary bills the TPA seems a lot less interested in.

In other words, a hard salary cap in local government is a very neat way of guaranteeing that expertise flows from public to private sectors.

It also, it’s worth noting, wouldn’t actually save that much money. Let’s assume those 2,314 council fat cats are paid an average of £150,000 (almost certainly an over-estimate, since only a quarter of them are paid more than that, but let’s go with it). Capping council salaries at £100,000 would therefore save 2,314 times £50,000, which is nearly £116m.

That sounds like a lot. It isn’t. In 2015-16, the total revenue spending by all local authorities in England (so not UK, but the vast majority of the UK) was £94.5bn.

That saving is a rounding error – just 0.12 per cent of the total budget. It’d hardly make any difference to the council financial situation – certainly not enough to justify that damaging loss of expertise and institutional memory.

So. Yes, at a time when food bank use is exploding because so many people literally can’t afford to feed their kids, the idea that a tiny minority of people are earning these ridiculous sums is just gross. And yes, fat cat salaries are a problem.

But it’s a problem across the entire economy – so any solution needs to look at the entire economy, too. It’s a nonsense to attack public sector pay rates in isolation. Attack high salaries in the public sector, while ignoring insane levels at the upper echelons of the private sector, and all you do is guarantee that the public sector will struggle to compete. That people and expertise will flow entirely from councils to contractors, and never the other way around. That the state will, in short, get worse at its job.

Surely that couldn’t be what the Taxpayers’ Alliance actually wants to happen? Could it?

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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